Details released of Mutual Funds and Private Funds bills ahead of debate

The Ministry of Financial Services on the Cayman Islands has released details of new regulatory requirements related to investment funds based the jurisdiction. It supplied the detail ahead of a meeting of the Legislative Assembly on January 30 at which the bills will be considered.

The chances will mean enhanced oversight of open-ended and closed-ended funds. It said the changes would provide additional surety and transparency for investors and managers of Cayman Islands investment funds, while better aligning with best market practices, enhanced anti-money laundering and other key regulatory standards.

The changes will come into force via the Mutual Funds (Amendment) Bill, 2020, and the Private Funds Bill, 2020. “The Bills seek to adopt the similar sensible and flexible regulation that has been the mainstay of our open-ended funds regime and will maintain the primacy of the Cayman Islands in and among the investment funds investing community,” the Ministry of Financial Services stated.

“The Bills balance the need for efficiency with investors’ desire for transparency and surety. The Government is dedicated to ensuring that the implementation of the legislation is seamless for industry stakeholders, investors and Government alike, and to that end is adopting processes that consider the current market practices of fund managers and other operators.”

It explained that the Private Fund Bill seeks to establish a framework to monitor closed-ended funds, which are currently beyond the scope of the Mutual Funds Law. The Mutual Funds (Amendment) Bill, 2020, will enhance the regulatory and supervisory framework for mutual funds.

It said it believes the Bills strike a balance to achieve their dual purposes of strengthening investor confidence in Cayman Islands investment funds vehicles while also ensuring that the Cayman Islands remains the preeminent jurisdiction for investment funds formation. “The Bills account for the need to update the investment funds framework while staying mindful of industry realities,” the statement said.

The Bills also addresses EU suggestions for investment fund oversight as set forth in a report dated May 27, 2019, from the EU Code of Conduct Group (Business Taxation).

It also noted that, while drafting the Bills, the Ministry of Financial Services consulted a Cayman Islands-based Working Group comprised of the Cayman Islands Monetary Authority (CIMA) and funds professionals, including accounting, audit, administration, governance and legal firms and associations to provide local industry perspectives.