An issuer may use several types of entities for its offering depending on the nature of the project. The most common type of Cayman-based Issuer is an Investment Fund. However, stand-alone companies may use this jurisdiction as well.Investment Fund
Regulation in establishing and operating investment funds varies depending on their type and some key parameters.
First of all, some funds do not require mandatory regulation. These include closed-end funds, as well as open-end funds with fewer than 15 investors. Such funds are free from CIMA regulations, but still fall under the Anti-Money Laundering Regulations, and their parent companies must comply with corporate law requirements enforced in the Cayman Islands.
CIMA regulates open-end funds based on the Mutual Funds Law of the Cayman Islands (“MFL”). According to the law, there are a few following streams for fund regulation:Registered
Must meet the following minimum requirements:
- The minimum initial capital of at least 100,000USD from each investor.
- Provision of audited financial statements annually.
- Appointment of an authorized Manager responsible for operations. Typically, a fund Director performs as a Manager.
- Passing the registration procedure in CIMA.
Allow a minimum initial contribution of participants less than 100,000USD. Must have a designated licensed administrator to operate a principal office in the Cayman Islands. This administrator has primary regulatory and legal responsibility for the management of the fund and is required to ensure compliance with legal and ethical standards during its operation.Licensed
Typically, licensed funds are established by major reputable institutions for retail investors. The issuer of the fund is required to undergo licensing with CIMAEU Connected Funds
This class of funds was introduced in 2017 as a reaction to the Alternative Investment Fund Manager Directive
(AIFMD) of the European Union. This directive limited promotion and trading rights of non-resident funds in the EU for European investors. According to the minimum requirements of AIFMD, funds offered in the EU must be regulated in their home jurisdiction.
Thus, funds that otherwise do not require regulation in the Cayman Islands have the opportunity to voluntarily go through the registration procedure to comply with the AIFMD directive and to earn permission to operate (advertise, trade) in the EU countries.
It should be added that this minimum requirement of AIFMD can optionally be toughened up by local regulators of the EU countries and so the Cayman Islands Fund would need to cooperate with the local legislation of individual EU countries. The final decision allowing a specific fund to the EU market is taken by regulators of individual EU member states on the basis of submitted applications and they are entitled to refuse at their discretion.
Formally, the AIFMD directive implies the requirement to achieve bilateral agreements between regulators of individual EU countries and third jurisdictions whose funds are interested in working in the EU. Actually, CIMA reached arrangements with regulators in most EU member states.Structured Portfolio Company
A Segregated Portfolio Company (SPC) is a structure that can create and operate one or more segregated portfolios that have statutory segregated assets and liabilities between portfolios. Under the Cayman Islands law, a Segregated Portfolio Company is an exempted company that has been registered as an SPC. It has the full capacity to undertake any activity subject to restrictions imposed by its Articles of Incorporation.
The general assets and liabilities of the SPC are held within a separate general account rather than in any of the SP accounts. Each SP, as well as the main SPC company, should have a separate bank account, brokerage accounts and other accounts as applicable to hold assets in a segregated way.
SPC has been historically used by fund managers to employ various investment strategies and manage assets and investors related to such strategies separately. However, it may also be used as a securitization vehicle for project financing. That is, for each project a separate segregated portfolio is created which manages investments in each project. This is beneficial as it protects investors in one project from financial hurdles or default of other projects.To quote fees please contact [email protected] or +356 998 84 993Foundation
The Foundation Company is a special kind of company that may be used for structuring financial transactions, wealth management, charitable purposes, and others. It is a body corporate with separate legal personality, which may be limited by shares, or guarantee, or without share capital, as there are no minimum capital requirements. A Foundation Company may be established for any lawful purpose, which must be specified in its Articles of Incorporation. Like any other exempt company, Foundation Companies will be exempt from any income tax. A Foundation Company is required to appoint a local qualified secretary licensed under the Companies Law, who would maintain full and proper records of the company activities.