What is a Master Fund in Cayman?

A master fund means a mutual fund incorporated or established in the Cayman Islands that holds the investments of and conducts trading activities on behalf of one or more regulated feeder funds. A regulated feeder fund means a CIMA regulated mutual fund that conducts more than 51% of its investing through another mutual fund.

Which entities fall within the scope of the revised definition of Private Funds?

The revised definition both clarifies the position for certain entity types and extends the scope of the PFL to additional entities. This clarification and extension may have changed the position for a number of entities, including but not limited to certain master funds, certain alternative investment vehicles and funds formed for a single investment.

Is there a transitional period for private fund registration?

The PF Law provides that private funds covered by the legislation must be registered by 7 August 2020. This applies both to private funds that were carrying on business on the date of the commencement of the PF Law (being 7 February 2020) and private funds that commence business within the six-month transitional period from 7 February 2020 to 7 August 2020. Private funds that launch on or after 7 August 2020 will need to comply with the registration timing requirements contained in the PF Law, as summarised below.

What does the Securities Investment Business Law consider to be securities?

Securities Investment Business Law (SIBL) defines securities as: Shares or stock of any kind of the share capital of a company (endnote) Debentures, loan stock, bonds, certificates of deposit, and any other instrument that creates or acknowledges debt (excluding various banking and monetary instruments e.g. cheques, mortgage instruments, and land charges). Warrants and other instruments that allow the holder to subscribe to certain securities Certificates or other instruments which confer contractual or proprietary rights Options on any security and on any currency, precious metal or an option on an option Futures Rights under contracts for differences (e.g. cash-settled derivatives such as interest rate and stock index futures, forward rate agreements and swaps)

Is there a minimum net worth requirement for a Securities Investment Business licensee and if so, what is the minimum?

Under the Securities Investment Business (Financial Requirements and Standards) Regulations, Securities Investment Business licensees are required to have base financial resource requirements. In the case of broker-dealers, market makers, and securities managers, the base financial resource requirement is CI$100,000 and in the case of all other licensees, the requirement is CI$15,000.

What are AML requirements (regulations) in Cayman?

The Cayman Islands anti-money laundering and countering terrorist financing (AML) regime requires mutual funds to maintain AML procedures as appropriate to the size of the fund.

The requirements include:

Adoption of a risk-based approach to monitoring investors and financial activities, together with adequate systems to identify risk (including checks against all applicable sanctions lists) in relation to persons, countries, and activities of the mutual fund;
Observance of the list of countries that are non-compliant, or do not sufficiently comply, with the recommendations of the Financial Action Task Force;
Procedures for:
- investor identification and verification
- risk-management;
  record-keeping;
- suspicious activity reporting;
  monitoring, and testing the systems for, compliance with AML and proliferation financing regulatory requirements; and
- Other internal control and communication procedures (eg a risk-based independent audit function)

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