Cayman Private Investment Fund

The Cayman Islands is the leading jurisdiction for the offshore investment funds industry due to its combination of flexible and appropriate regulation, an approachable and effective regulator, professional service provider expertise, high reputation among investors, and a tax-neutral regime.

Advantages of a Cayman Islands Private Fund License

• The Cayman Islands does not impose taxes on profits, capital gains, or inheritance, making it an attractive jurisdiction for fund structures.
• Establishing and registering a fund with CIMA can take only 4-5 months.
• Funds can receive a tax exemption for up to 30 years, with the possibility of extending it for an additional 10 years.
• A private fund registered in the Cayman Islands enjoys high credibility among global investors and regulators.
• There are no restrictions on foreign exchange transactions.
• Unlike many other jurisdictions, the Cayman Islands allows full foreign ownership of private funds.

Requirements for a Cayman Private Fund License

To operate as a licensed private fund in the Cayman Islands, companies must register the fund with Cayman Islands Monetary Authority (CIMA). The primary requirements include:

• The fund must ensure sufficient capital is available for operation, as required by CIMA.
• At least two directors must be appointed. There are no residency requirements for directors.
• A minimum of two shareholders is required.
• Private funds must have a registered office in the Cayman Islands.
• Funds must establish and implement AML and KYC procedures.
• Private funds must pay an annual fee by January 15 each year.

Process and Timeline for Obtaining a Cayman Islands Private Fund License

The process to obtain a Cayman Islands Private Fund License involves several steps:

1. Create a company on the Cayman Islands.
2. Gather the necessary documents (financial information, resumes, business plans, etc.).
3. Submit the application to CIMA.
4. CIMA may request further documentation or clarifications.
5. After submission, the fund receives preliminary approval and must meet all requirements within 21 days.
6. After fulfilling all requirements, the fund is officially registered with CIMA.

This process typically takes 4–5 months.

Required Documents for Applying for a Private Fund License

The application process requires a comprehensive set of documents, including:

• Corporate documents.
• Letters of recommendation from the fund’s auditor and administrator.
• Professional resumes of directors and shareholders.
• AML/KYC compliance documentation.
• Proof of minimum capital and financial documents.
• A detailed business plan.

Our professional advisors are often engaged to ensure full compliance with CIMA’s requirements.

Regulation of Private Fund License in the Cayman Islands

The Cayman Islands Monetary Authority (CIMA) regulates all private funds. The regulatory framework includes:

• Private Funds Act — the primary legislation governing closed-ended investment funds in the Cayman Islands.
• Securities Investment Business Act — regulates investment managers and brokers.
• Private funds must conduct asset valuations at least annually and submit reports to CIMA.
• CIMA has the authority to license, supervise, and revoke licenses as needed.

Taxation in the Cayman Islands

The Cayman Islands offers favorable tax conditions for private funds, including:

• No taxes on profits or capital gains.
• The ability to apply for a 30-year tax exemption, with the possibility of a 10-year extension.
• No direct taxes on capital, inheritance, or corporate income.

Who is this Structure Suitable For?

A Cayman Islands Private Fund is ideal for various types of investors and companies looking for flexibility and tax advantages. The key categories of clients who may benefit from this structure include:

• Ideal for venture capital, private equity, and real estate funds, enabling efficient asset management and investment in high-growth sectors.
• A great solution for pooling capital for joint investments with full control over the fund’s operations.
• Used by hedge funds to create multi-layered investment strategies with closed structures and controlled investor access.
• Suitable for companies managing large assets, offering asset protection and tax optimization.
• A top choice for global investors seeking an internationally recognized, tax-efficient structure with minimal regulatory burdens.

Why Choose SBSB Fintech Lawyers?

Obtaining a Private Fund License in the Cayman Islands is an efficient and cost-effective solution for investors seeking to establish funds in a leading global jurisdiction. At SBSB, we specialize in providing comprehensive legal and regulatory support to businesses looking to obtain Cayman Islands Private Fund Licenses. We guide you through every step of the process – from fund registration and preparation of required documents to ensuring compliance with AML/KYC regulations, capital requirements, and operational setup.

Contact us today for tailored legal advice and solutions on how to obtain a Cayman Islands Private Fund License and ensure your business thrives in the dynamic and growing investment sector.

Official Sources

• Cayman Islands Monetary Authority (CIMA) — official website
• Private Funds Act (PF Act)
• Guidelines for AML/CTF compliance 
• Securities Investment Business Act

FAQ about a Cayman Islands Private Fund License