The Cayman Islands Monetary Authority (“CIMA”) has recently issued an updated rule and regulatory procedure in respect of the cancellation of licenses or certificates of registration for regulated mutual funds and registered private funds respectively.
The main changes relate to improved clarity in respect of the timing of the deregistration process and removing the option to place a fund in either a ‘'License under Termination'' (“LUT”) or ‘'License under Liquidation” (“LUL”) status with CIMA.
Under the previous deregistration process, a fund could be placed in LUT or LUL once it had decided to cease trading or to liquidate but before it had completed the full deregistration process. Provided that a fund did this before 31 December in any given year, the fund would benefit from a reduction in annual fees and would have a prescribed period of time within which to complete the full deregistration process. However, under the new deregistration rules, annual fees at the usual rate will accrue accordingly.
Under the new rule and procedure, CIMA must be notified of a fund's intention to deregister within 21 days of making that determination but funds will remain in fully ‘active' status until the deregistration procedure has been fully completed (i.e. the filing of a final audit (or seek and be granted an audit waiver/exemption from CIMA), filing an operator's affidavit that the relevant termination processes have been completed, paying all fees and completing all filings).
CIMA note that it is anticipated that the deregistration and approval process will be more efficient for funds seeking to deregister as a result.
CIMA have confirmed that all deregistration applications made on or after 17 August 2022 are subject to the new deregistration rules and procedures.
CIMA have also confirmed that any funds that have submitted applications under the pre-existing procedures prior to that date will still be able to take advantage of the fee concessions under those now historic procedures, provided the filing requirements associated with their LUT/LUL status have been met.
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