Termination of Cayman vehicles and CIMA director registration renewals and cancellations

As the end of the calendar year approaches, if you have any Cayman vehicles that you are considering terminating, there are several steps to be taken before the end of the calendar year to minimise 2023 annual fees.

For funds regulated by Cayman Islands Monetary Authority (CIMA), the timing of de-registration submissions of the regulatory policy has been amended, leading to the change of procedures for terminating funds.

Updated De-registration rules for Cayman Islands Regulated Funds

With effect from 17 August 2022 With the aim of streamlining the process for de-registering mutual funds and private funds, the Cayman Islands Monetary Authority (CIMA) has recently announced a list of updated Rules and Regulatory Procedures (the Rules) on the Cancellation of Licences or Certificates of Registration for Regulated Mutual Funds and Registered Private Funds. CIMA have confirmed that all de-registration applications made on or after 17 August 2022 will follow the new Rules. CIMA made clear that any funds that have submitted applications under the old procedures prior to 17 August 2022 will still be able to take advantage of the fee concessions under the old rules. Under the updated Rules, the “Licence under Termination” (LUT) and “Licence under Liquidation” (LUL) options have been eliminated and regulated funds must file all applicable deregistration documents in a single bundle. Regulated funds will remain fully registered with CIMA and liable to pay full annual fees until the complete deregistration application has been submitted following the final distribution to investors and the completion of the final audit. Regulated funds must have paid all prescribed fees and submitted all required audited financial statements and must not have any outstanding queries or regulatory filings with CIMA. Corresponding to the old rules, regulated funds must notify CIMA when the funds intend to cease carrying on business or have ceased carrying on business as a regulated funds pursuant to the Mutual Funds Act or the Private Funds Act within 21 days of the date the funds cease to carry on business. The content of the deregistration requirements does not have significant changes under the updated Rules.

Cayman Islands Voluntary Liquidations

If you have a Cayman company which you no longer require and would like to dissolve before 31 December 2022 in order to avoid paying the annual fees next year, on the basis that the company is not a regulated entity and is solvent, the voluntary liquidation process should commence by 31 August 2022. We strongly recommend clients to start the liquidation process earlier, especially for clients holding entities with complex structures. This is to ensure full dissolution by the end of the calendar year. This helps companies avoid additional regulatory costs and reduce administrative burdens. Voluntary liquidation process The voluntary liquidation procedures of a company would follow the below procedure: Determine if the company is suitable using the solvency test Declarations of Solvency signed by all directors Shareholders pass a Special Resolution, which must: Resolve to wind up the company; Appoint voluntary liquidator(s); Approve the liquidators fee; and Provide for an indemnity to the liquidators Notice and Liquidators consent, filed with the Registrar of Companies (Registrar) and a notice that the shareholders have resolved to liquidate the company Publish the First Gazette Notice Publication of Notice in other jurisdictions Publish the Second Gazette Notice Pay any creditors claims Pay final dividend Final meeting held and notice to Registrar The following types of companies may find a 2022 dissolution date beneficial: Companies that are reporting as Financial Institutions under FATCA or CRS Relevant Entities undertaking Relevant Activities under the Economic Substance Act Benefits of voluntary liquidation Why should you consider to voluntarily liquidate a Cayman entity which you no longer require? Voluntary liquidation can efficiently close down a company while avoiding court processes and legal action. Additionally, it offers protection

Are your entities compliant?

The Cayman Islands Monetary Authority (CIMA) has recently imposed USD365,000 in administrative fines on an asset manager for breaches of the AML Regulations, serving as a timely reminder on the value of effective compliance and the importance of registered entities having effective anti-money laundering policies and procedures in place.