Thursday, 20 December 2018 15:19

Cayman Islands Funds


Private or Mutual Investment Funds

Establishing investment funds in the Cayman Islands can be quite beneficial.  Private placement funds, namely, have found a niche here, but funds may also be established for all types of investors.  Currently, there are over 6,500 regulated funds and many more unregulated funds existing in the Cayman Islands – mostly for institutional and sophisticated high net worth investors. The high degree of flexibility allows mutual funds to be structured as companies, trusts or limited partnerships.  The lack of restrictions on investment objectives, no requirements for local custodians, and the fact that a fund vehicle may be economically and quickly established and registered through experienced professions have all led to the popularity of fund place in the Cayman Islands.
Regulation of investment funds is handled by the Cayman Islands Monetary Authority (CIMA).  Generally, only open-ended funds are regulated and require registration through CIMA and review by a firm of auditors, while closed-ended funds are not required to be registered.
There are three categories of regulated funds: registered mutual funds, administered mutual funds, and licensed mutual funds.  Registered mutual funds require registration with CIMA and a minimum investment of $50,000 USD.  The majority of regulated funds in the Cayman Islands belong to this category.  Administered mutual funds are established y appointing a licensed mutual funds administrator, who provides the principle office of the fund in the Cayman Islands and carries primary regulatory responsibility.  Licensed mutual funds are established and operated by large, reputable and well-known institutions.  Depending on the type of vehicle used, mutual funds are managed by their directors, or general partners.  Corporate funds require at least two directors, while day-to-day operations of mutual funds are usually delegated to other specialist professionals.
Cayman Islands make a great location for investments and there are many kinds of funds to choose from, according to your needs. 

Our Fees for a Registered Cayman Islands Investment Funds € 30.000


CIMAThe Fund will be established as a corporate entity and will not be a segregated portfolio company. We also assumes that the Fund will be an exempted company.

1.1)The documents we foresee being required in the establishment of an investment fund in the Cayman Islands include the following:

a)Offering Memorandum - if the Fund is not registered under the Cayman Islands Mutual Funds Law  (as to which, see Section 2 below), an offering document will not be required for regulatory purposes. It may be desirable to prepare such document to frame the terms and conditions on which shareholders invest in the Fund and to act as a marketing document, but depending on your market this initially could be incorporated into the subscription agreement;
b)Subscription agreement;
c)Memorandum and Articles of Association;
d)Investment Management Agreement;
e)Administration Agreement;
f)Distribution Agreement (if applicable);
g)Brokerage documents/Custodian Agreement (if applicable);
h)Organizational and directors' resolutions.

1.2)The quote in Section 3 below assumes that we will be responsible for drafting the Offering Memorandum, Subscription Agreements, the Memorandum and Articles of Association (i.e. the constitutional documents) of the Fund, the Organizational and directors' resolutions, the investment management agreement and, if applicable, the Distribution Agreement. The administration and brokerage documents/custodian agreements will generally be in the standard form of the administrator or custodian, prime broker. We would, expect to review, and have an opportunity to comment on, such documents.
1.3)  We will prepare the required documents and will attend to the incorporation of the Fund as an exempted company and deal with post incorporation formalities and filings. It is usual to incorporate a mutual fund with standard form Memorandum and Articles of Association and then to adopt constitutional documents drafted to give effect to the terms of the offering once the Offering Memorandum has been finalized.

The most common form of registration is with a minimum initial subscriptions with amounts of US$100,000 or more (or if the equity securities are listed on an approved stock exchange).

3) Costs
3.1.) On the basis set forth above we estimate that our fees for preparing all necessary legal documents (with prime responsability for drafting the documents listed in 1.1. above) in establishing the Fund up to and including its launch, will be €30.000.
3.2.) The work will be billed on a time spent basis. The hourly charging rates of investment fund team attorneys are between €400 and €600.
3.3.) The following governments fees are included in our fees and will be payable in respect of the incorporation of the Fund (with a share capital of US$50,000). All amounts are quoted in US$.
Reservation of Name                            
Formation Agent Fee                         
Incorporation Fee (Registrar)                       
Certified Copies of Certificate               
Stamp Duty                                         
Tax Exemption Certificate                   
Amended M&A of Association              
Registration with (CIMA)                   

4.)Annual Maintenance
4.1.) The Fund will be required to maintain a registered office in the Cayman Islands. Caporaso and Partners, will provide the registered office for the Fund going forward for an annual fee of €1,800.00. Please note that Caporaso and Partners also provides director services. If this is of interest to you please let us know and we will provide further information.
4.2.)There is an annual fee payable to the Cayman Islands Government at the end of each year of US$732.00 per annum in respect of each company if it is an exempted company and if the authorized capital of the company is US$50,000.00 (in respect of the calendar year of incorporation, this fee is included in the disbursements above).
4.3.)Being a Fund regulated by CIMA (Cayman Islands Monetary Authority), an annual fee of US$3,659.00 will be payable (in respect to the calendar year of incorporation, this fee is included in the disbursements above). Please

5.)Action Required
If you which to instruct Caporaso and Partners to act in the set up of the proposed Fund (as outlined above), then we will forward our forms which includes a request for the Due Diligence and the payment of the fees in full). Our due diligence checks are as result of regulations made pursuant to the Proceeds of Criminal Conduct Law (Revised), pursuant to which legal and financial services advisers are required to undertake certain due diligence in respect of new clients.

Please quote a Fund with higher capital (standard is 50.000.00 USD)