Cayman Offshore Company Formation and Management

MUTUAL FUND SERVICES

Government Administration Building - George Town

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BACKGROUND AND DEFINITIONS

The Cayman Islands have become a major jurisdiction for the establishment and administration of Mutual Funds. Mutual funds are licenced in accordance with the Mutual Funds Law (1996 Revision) which governs mutual funds incorporated in or administered from the Cayman Islands. A mutual fund is defined as a company or a unit trust or a partnership that issues equity interests the purpose or effect of which is the pooling of investor funds with the aim of spreading investment risks and enabling investors in the mutual fund to receive profits or gains from the acquisition, holding, management or disposal of investments. An “equity interest” for the purposes of the definition means an interest which is redeemable or repurchasable at the option of the investor. It follows therefore that a “close-end” fund is outside of the ambit of the law. In addition, any mutual fund in which the equity interests are held by not more than 15 investors, the majority of whom are capable of appointing or removing the operator of the fund, is not required to comply with the requirements of the law. While the law makes provision for the regulation of mutual funds established as partnerships or unit trusts, most funds are incorporated as exempted companies.

The usual form of mutual fund utilised in the Cayman Islands is one designed to attact the sophisticated investor, and which is established to have a minimum required investment for any investor of US$48,000.00. Such a fund (termed a Regulated Section 3(3) fund) must register with the Financial Services Supervision Department, filing prescribed details in respect of its current offering document. Such a fund must file annual financial statements, audited by an approved auditor (who need not be in the Cayman Islands.) The registration fee and annual fee for such a fund is US$610.00.

DETAILS TO BE FILED

The following information must be filed with the Inspector of Financial Services for the purpose of registration as a Regulated Section 3(3) fund:

1. Type of entity (i.e. Company, Partnership or Unit Trust)

2. Description of the fund as set out in the Offering document, specifying:

(a) Maximum and minimum aggregate amount of offering.
(b) Investment objectives
(c) Investment restrictions
(d) Risk factors of the fund
(e) Minimum investment for Investors
(f) Actual or expected size of shareholder base
(g) Frequency of valuation and shareholder issues and redemptions
(h) Base currency of equity interest
(i) Whether interests are to be issued in bearer or registered form

3. Names of Directors (or Trustee or General Partner)

4. Name and Address of Registered Office

5. Specify all service providers, including

(a) Distributor
(b) Custodian
(c) Promoter/Sponsor
(d) Manager
(e) Administrator
(f) Investment or Trading Manager
(g) Investment or Trading Advisors
(h) Bankers
(i) Lawyers

6. Name and Address of auditors and financial year end

7. Name of Stock Exchange if listed

8. Evidence of incorporation. On submission of all required documents and the prescribed fee registration can be completed within 10 days.

PROVISION OF OFFSHORE SERVICES BY IMS

International Management Services Ltd holds a Mutual Fund Administrators Licence under the Mutual Funds Law and can provide services to Regulated Mutual Funds, including the provision of “Operators” as defined in the law.

These services include:

1. Drafting of by-laws and incorporation of the company, or registration of the partnership.

2. Submission of application and documents for Registration of the Fund.

3. Provision of Registered Office.

4. Provision of Statutory services, including maintenance of Shareholders Registers

5. Provision of Directors and Company Secretary.

6. Maintenance of books and records, net asset value calculation.

7. Preparation of accounts.

8. Shareholder communications.

9. Banking management, including receipt and disbursement of subscriptions/redemptions.

10. Introduction to approved auditors, lawyers.

OTHER MUTUAL FUND TYPES

Specialised compliance requirements apply to mutual funds for which the minimum investment is less than US$48,000.00 and IMS can advise on those requirements on request.

Return to IMS Brochure