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Cayman Islands mutual funds are regulated under the Mutual Fund Law 1996, and as regards listing they fall under the Stock Exchange Company Law 1996. The Mutual Fund Law requires mutual funds to be licensed, or to be administered by a licensed mutual funds administrator. There are the following exemptions from the requirement to license: |
• A fund listed on a recognized stock exchange;
• A fund with a minimum purchasable aggregate equity interest of CI$40,000;
• A fund with not more than 15 investors holding voting equity interests;
• A closed-end fund
A mutual fund administrator must be licensed; he must have a registered office on Cayman, must be competent, and must have a net worth of at least CI$400,000. Mutual funds must be audited annually, and the financial statements must be filed with the Monetary Authority within six months of the end of an accounting period. There are no restrictions on the investment policy of funds in Cayman, whether listed or not.
For listing on the Stock Exchange, certain other originating jurisdictions are 'approved': Bermuda, Canada, all EU member states, Guernsey, Hong Kong, Isle of Man, Japan, Jersey, Malaysia, Singapore, Switzerland, and the USA. For funds which have primary listings on recognised stock exchanges, a secondary listing may be acquired in Cayman quite simply; the services of a listing agent are not mandatory.
Funds to be listed must appoint a custodian who is a separate legal entity from the fund, its operators or its administrators, but may be an associate of any of them. The fund must have an independent auditor. There are some shareholder disclosure requirements; and information is required about the fund's main broker and the regulatory regime applying, in particular for segregation of fund assets. In order to be listed, a fund must have at least 25% of listed securities in public hands, or restrict trading to professional investors. There are detailed rules specifying the contents of the Listing Document.
Listing is possible both for open- and closed-end funds; funds may take various corporate forms, including: investment company, unit trust and partnership. In Cayman Island terms, the entities that may be used include the exempted company, the limited duration exempted company, the ordinary non-resident company, the exempted trust, and the exempted limited partnership. NB: The above is an abbreviated summary of some aspects of the Cayman Islands Stock Exchange listing regime, given for general information only.
In September 2002, Cayman introduced a new law requiring licensing for any one conducting securities investment business except where an exemption is available. The Securities Investment Business Law, 2001 initially applies only as regards exemptions from the registration requirement, but will be fully in force as of the end of 2002.
The Law requires licensing of anyone conducting securities investment business except where an exemption is available. The licensing requirement applies only to entities incorporated, formed or registered in the Cayman Islands or to any entity which, or person who, has established a place of business in the Cayman Islands through which securities investment business is carried on.
Both securities and securities investment business are very broadly defined. Securities include shares, limited partnership interests, unit trust interests, debentures and bonds and other instruments evidencing indebtedness, warrants, and certificates representing certain securities, options, futures and contracts for differences.
Securities investment business includes dealing in securities, arranging deals in securities, managing securities and advising on securities. However, there are many exemptions from the law, particularly as regards securities business carried out for professional or 'qualified' investors.
Source: www.lowtax.net
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