The Cayman Islands has a constantly evolving governance framework, with the below providing an overview of some important developments and upcoming deadlines in relation to Cayman Islands investment funds and investment managers for 2024.

Corporate governance in the Cayman Islands

End of 2023, various regulatory measures from the Cayman Islands Monetary Authority (“CIMA”) became effective, which contain requirements that are to strengthen the corporate governance framework of regulated entities in the Cayman Islands. These measures apply to mutual funds and private funds as well as investment managers. All such entities need to have a corporate governance framework in place that is commensurate with the entity’s size, complexity, structure, nature of business and risk profile. Entities subject to these new requirements will need to review their current framework and update it where necessary. In practice, the following will be important to ensure compliance:

• Reviewing and updating the entity’s constitutional documents and offering documents to make sure the relevant language on the corporate governance framework is included;
• Preparing a corporate governance manual that is tailored to meet the specific needs of each entity;
• Holding the requisite number of board meetings (at least once a year) and keeping appropriate records thereof; and
• Drafting the necessary resolutions for the adoption of the various corporate governance-related measures.

In case no action has been taken yet in this regard, it is important to do so on a timely basis. We can provide support with any of the above points and can assist with the implementation of the corporate governance framework. Specifically, we can offer dedicated secretarial assistance as well as specific software solutions (through our platform Board Intelligence) to provide full and ongoing support.

AEOI

As part of the automatic exchange of information (“AEOI”) framework, details of certain investors will need to be reported to the local tax authority of the Cayman Islands, the Department for International Tax Cooperation (“DITC”), in order to promote global tax compliance. Details that are shared include the name, address, date of birth, tax identification number, tax residence and value of the holding as of 31 December of the previous year. Afterwards, these details are shared with the tax authorities of the jurisdictions where these investors are tax residents (which are the United States in the case of FATCA and any reportable jurisdictions that have a mutual agreement to exchange information in the case of CRS). The applicable deadlines for the 2023 reporting year are as follows:

FATCA:

• Registration: 30 April 2024
• Reporting: 31 July 2024

CRS:

• Registration: 30 April 2024
• Reporting: 31 July 2024
• CRS Compliance Form: 15 September 2024

Please reach out to us and we can further discuss the process to ensure compliance with any AEOI requirements.

AML

As part of the anti-money laundering (“AML”) framework of the Cayman Islands, both investment funds and investment managers are required to, inter alia, (i) appoint AML functionaries (AMLCO, MLRO, DMLRO), (ii) adopt entity specific AML policies and procedures, (iii) oversee the implementation of those AML policies and procedures by the entity (iv) have the implementation thereof documented and presented to the board of the entity, (v) have an audit performed annually of its AML arrangements and (vi) have the AML functionaries, as well as the entity’s principals (such as directors in case of a company), take the required AML training annually.

We can assist with any of the aforementioned items and provide customised solutions. Especially noteworthy is the last item, the requirement for each AML functionary as well as each principal of the entity to do an annual AML training, which we noted is quite often overlooked in practice. We have a dedicated training portal where we offer tailored AML training for each of the AML functionaries as well as an entity’s principals.

Additionally, we have noted that a substantial number of entities still do not have up-to-date AML policies and procedures in their own name. Initially, such entities might have relied on the AML policies and procedures of their service providers, such as their appointed administrator. However, such reliance is no longer accepted, and each entity should have its own AML policies and procedures in place. We can assist by preparing specific and tailored AML policies and procedures.

FAR

Cayman Islands investment funds are required to submit a fund annual return (“FAR”) with CIMA on an annual basis. In order to comply with this regulatory reporting requirement, all regulated mutual funds and private funds have to submit the FAR within six months of the relevant financial year end of the fund. Therefore, in case of a financial yearend of 31 December 2023, the reporting deadline for the FAR is 30 June 2024. Completion of the FAR for regulated mutual funds and private funds is done by us in case we are appointed, while submission of the FAR takes place through a dedicated portal of CIMA and is done by (i) the local auditor for regulated mutual funds and (ii) the local auditor or the registered office for regulated private funds. In the FAR, the following information needs to be provided:

• Details of the fund as well as its service providers; and
• Details of the fund’s financial position, including (i) the net asset value, (ii) the total amount of subscriptions/redemptions, (iii) the allocation of the assets between asset classes, (iv) the allocation of the assets by jurisdiction, (v) the expenses and (vi) aggregated details of the fund’s investors (specific details of each investor are not required to be submitted).

We are available to discuss compliance with the FAR requirements and to make sure that any requisite filings will be made on time.

Valuation policy

In accordance with regulatory measures from CIMA, both mutual funds as well as private funds need to have a valuation policy. The valuation policy needs to describe the pricing and valuation practices, policies and procedures as well as the process for the calculation of the net asset value (“NAV”). It should furthermore ensure that the NAV calculation is fair, reliable, of high quality and verifiable. In addition, it should describe at least a quarterly NAV calculation and publication for mutual funds and an annual NAV calculation and publication for private funds. We can assist with drafting the necessary documentation.

Note that the above summary only provides key details of certain governance requirements in the Cayman Islands for investment funds and investment managers, we advise you to get in touch for any tailored advice in relation to these developments or deadlines, as well as any other governance-related matters. We are happy to assist with any of the above items, simply reach out to us for any further guidance and assistance.

Disclaimer. Bolder Group does not provide financial, tax or legal advice and the information contained herein is meant for general information purposes only. We strongly recommend that before acting on any of the information contained herein, readers should consult with their professional advisers. The Bolder Group accepts no liability for any errors or omissions in the information, or the consequences resulting from any action taken by a reader based on the information provided herein.

Bolder Group refers to the global network of independent subsidiaries of Bolder Group Holding BV. Bolder Group Holding BV provides no client services. Such services are provided solely by the independent companies within the Bolder Group which are each legally distinct and separate entities and have no authority (actual, apparent, implied or otherwise) to obligate or bind Bolder Group Holding BV in any manner whatsoever. The operations of the Bolder Group are conducted independently and have no affiliation with third-party financial, tax or legal advisory firms or corporations.