The Cayman Islands Private Funds Law, 2020 (the “PFL”) has recently been amended. The amendment has, among other things, widened the scope of the definition of a “private fund” and subjected more entities to the requirement of registering with the Cayman Islands Monetary Authority (“CIMA”).
In the amended definition:
“principal business” was removed, which means entities that only have some private fund business but are mainly engaged in non-fund business may now be required to register with CIMA;
“the offering and issuing of investment interests” was replaced by “that offers or issues or has issued investment interests,” which means, among other things, entities without subsequent offering of its investment interests may now be required to register with CIMA;
“spreading investment risks” was removed, which means funds formed to hold only a single investment may now be required to register with CIMA; and
"for reward based on the assets, profits or gains of the company, unit trust or partnership" was removed, which means funds whose operator does not charge management fee or carry or where fees are unrelated to the assets, profits or gains of the entity, may now be required to register with CIMA.
The PFL requires all existing close-ended funds formed in Cayman must register with CIMA on or before August 7, 2020. Failing this, there will be a fine of CI$100,000 (approximately US$121,000). Thereafter, new funds must register with CIMA within 21 days of the fund’s acceptance of capital commitments from investors. Close-ended fund managers of previous unregistered Cayman funds should discuss with Cayman counsel with respect to the recent amendment.