The Private Funds Law (“PF Law”), which was enacted since February 2020 by Cayman Islands Government, has an amendment recently about the definition of a private fund and extends its scope to additional entities.
Does the “private fund” term apply to your entity?
The revised definition includes any company, unit trust or partnership that offers or issues or has issued, non-redeemable investment interests, the purpose or effect of which is the pooling of investor funds with the aim of enabling investors to receive profits or gains from such entity’s acquisition, holding, management or disposal of investments, where:
- The holders of investment interests do not have day-to-day control over the acquisition, holding, management or disposal of the investments; and
- The investments are managed as a whole by or on behalf of the operator of the private fund directly or indirectly.
Under this change, the entities which previously may have been classified as out-of-scope are now may be required to register with Cayman Islands Monetary Authority:
- Vehicles set up to hold only a single investment
- Co-investment vehicles
- Alternative investment vehicles
- Master funds
Your next steps to stay in compliance
We highly recommend you to complete your classification if you are uncertain about your case and take action quickly to follow the jurisdiction’s strict timeline. Noteworthy that the private fund cannot carry on business unless it has submitted the application for registration within 21 days after the fund has accepted the capital commitments, from investors for the purpose of investment.
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