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REGISTRATION OF THE HEDGE-FUND ON THE CAYMAN ISLANDS

How to create a hedge fund properly, how to register a hedge fund in the Cayman Islands, a hedge fund offshore in the Caymans as the best option for registering funds - the answers to all of these and other questions can be found on this page.

Cayman Islands have a high reputation as a tax-free jurisdiction comparing with other traditional offshore companies. Caymans are not included in the "black" list of countries evading cooperation, developed by the FATF and OECD.

Hedge fund in the Cayman Islands is one of the most attractive ways of collective investing with minimized risks, and with the expectation of a general coverage of financial risks.

Despite the fact that the best jurisdictions for registering investment funds (hedge funds) abroad are offshore (the Cayman Islands, the Bahamas, the British Virgin Islands), the activities of funds even in offshore zones are subject to strict state regulation and control.

One of the most attractive features of the fund on the Cayman Islands is the issue of the residence of founders, directors, etc., namely its absence, which means that it is not necessary to reside in the Caymans to create a hedge fund. The creation, organization and operation of a hedge fund in the Caymans is governed by the Mutual Funds Law.

Legislative regulation

The legislation of the Cayman Islands is based on the rules of general Anglo-Saxon law. And unlike most other jurisdictions, the Caymans have a fairly well developed precedent law.

 

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FUND TYPES

There are the types of fundsIn Caymans:

1. Adjustable (should be open), they include:

  • Licensed mutual fund
  • Administered mutual fund
  • Registered mutual fund.

2. Unregulated funds (open and closed).

Based on the experience and requirements that our clients put to us when structuring the fund, the most acceptable type of fund is an unregulated fund.

One of the requirements for open funds is the need for its functioning as an exempted partnership with limited liability or as an exempt company.

Each of the types of fund in the Cayman Islands has its own peculiarities of organization, obtaining a license, the size of the authorized capital and other administrative moments, which give freedom of choice for the investor, depending on his interests, capital and other factors.

Regarding the Registered Fund, such a fund has requirements to the minimum amount of the fund's capital that an investor acquires and which should be US $ 100, 000 and the number of investors should not exceed 15 people; in the organization of other types of funds such a requirement is absent.

You may be interested in these publications:

1. Where to register hedge funds?

2. Hedge funds in Europe. Malta

3. Requirements for Funds investing in cryptocurrency

The activity of investment funds in the Caymans is a subject of licensing, except for funds whose number of shareholders does not exceed 15, provided that the majority of shareholders of such an investment fund have the right to vote when deciding on the appointment and removal of fund directors.

But even if in future the beneficiaries of the fund decide to increase the amount (more than 15), this will be a simple procedure, since the requirements for licensing the investment fund in the Cayman Islands are minimal.

Administered Fund has its peculiarity that a fund administrator should be appointed with a certain license and be a resident of the Cayman Islands, but there is no requirement for the number of investors and the amount of the authorized capital (invested amount) of this fund.

Master Fund is an organizational system of the fund in which it consists of one or more Regulated Feeder Funds that are directly registered with CIMA and conducts 51% or more of its investment activity through another mutual fund. The authorized capital also amounts to US $ 100,000, which is acquired by the investor, or corresponding shares of investors should be listed on the stock exchange, which is approved by CIMA.

FUND MANAGEMENT

The company needs only one shareholder and one director, and they do not need to be residents of the Cayman Islands. Meetings of shareholders should not be held in the Caymans. In this case it is recommended to conduct it in the jurisdiction of the management company.

The requirements for the audit of financial statements can be determined by investors at the general meeting of shareholders. Annual reports should be submitted to the Register, where only corporate information is confirmed.

The requirements for the management company in Cayman are next: the management company must obtain a license, but it is also possible to receive the exemption, if the investment activity is carried out for the company, partnership or trust by shareholders whose participants or partners are investors that fall under the definition of a "professional" investor or an independent individual.

A "professional" investor is determined as an investor whose investment in the fund is at least $ 100,000.
The income of a management company established in the Caymans is not a subject to taxation, as far as income distributed to shareholders. As for the structure of the fund, the administrator of the fund and the depositary may be established in another jurisdiction.

TERMS OF CREATION OF THE FUND ON CAYMANS

Regarding the time for creating a fund in the Cayman Islands, the direct registration of the fund will take 10 working days, and the process of obtaining a license will take from 4 to 8 months, from the moment when all the necessary documents were received by us.

As it was already written above, the most comfortable offshore jurisdictions for creating hedge funds are the Cayman Islands, the Bahamas and the British Virgin Islands.

If you are interested in establishing a fund in the Cayman Islands or in other jurisdictions, we offer you our professional services of incorporation of a local company and obtaining a license of the fund.

If you want to establish a fund on Cayman Islands, please feel free to contact our specialists via phone numbers, listed on a web-page, or send a request on info@sb-sb.com

Our specialists consider each request individually and will be able to provide qualified advice on your individual requests.

We will offer you a large selection of countries where we have experience: Bahamas, Cayman Islands, British Virgin Islands, Jersey, Malta, Luxembourg.

For over five years we have been consulting our clients in the field of corporate law, international tax planning, finance, international licensing and integrated business support in more than 40 countries.

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