CAYMAN ISLANDS Law and Practice Contributed by: Sailaja Alla, Matt Mulry, Maree Martin and James Mossetto, Appleby
as a director for a covered entity) are required to be licensed under such Act. The Directors Registration and Licensing Act does not apply to: • directors of funds registered under the PFA; and • directors of general partners of mutual funds struc - tured as exempted limited partnerships. 2.9 Rules Concerning Service Providers Cayman Islands funds are not required to have any service providers located in the Cayman Islands, except as follows: • all investment funds are required to maintain a registered office in the Cayman Islands; • all investment funds are required to appoint audi - tors, either based in the Cayman Islands or based elsewhere with auditors in the Cayman Islands signing off on the audited financial statements; • administered funds are required to have a principal office in the Cayman Islands provided by a Cayman Islands-licensed mutual fund administrator; and • licensed funds, structured as unit trusts, must have a locally licensed trustee. Non-local service providers, including administrators, custodians and investment managers, will not be sub - ject to regulation/registration requirements as long as they do not establish a place of business in the Cay - man Islands and do not conduct business from or within the Cayman Islands. 2.10 Anticipated Changes for Funds The Virtual Asset (Service Providers) (Amendment) Act, 2025 (the “VASPA Act”) was gazetted on 22 July 2025 but is not yet in force. The VASPA Act updates the definitions “issuance of virtual assets” or “virtual asset issuance” to exclude: • the sale of virtual service tokens; and • in accordance with a statement of guidance or rule that may be issued by CIMA, the issuance of an equity interest as defined under the MFA and the Securities Investment Business Act (SIBA) or an investment interest as defined under the PFA. Once brought into force by Order made by the Cabi - net, the amendments will have retrospective effect for
any tokenisation of an equity interest that occurred prior to the commencement of the VASPA Act. This amendment provides welcome clarification that a Cayman Islands fund that issues tokenised invest - ment interests will not be subject to regulation under both the VASP Act and the MFA or PFA, as applicable.
3. Fund Managers 3.1 Origin of Promoters/Sponsors of Alternative Funds
There is no requirement for a Cayman Islands fund to have a Cayman Islands investment manager; there - fore, investment managers for Cayman Islands funds are not usually located in the Cayman Islands. Investment managers for Cayman Islands funds are based across the globe, including in North America, Europe, Asia and Latin America. 3.2 Legal Structures Used by Managers The Cayman Islands offers a wide range of vehicles for the establishment of investment managers, and while companies are the most popular, the type of vehicle utilised will very much depend on familiarity, prefer - ence and onshore tax considerations. Where Cayman Islands vehicles are used for a fund’s manager, these allow for very flexible equity incen - tive arrangements for their equity holders through bespoke constitutional documents and shareholder agreements. A remuneration policy is required for the governing body and certain employees of a Cayman Islands licensed or registered investment manager, which must: • not induce excessive or inappropriate risk-taking; • align with the corporate culture, objectives, strate - gies, identified risk appetite and long-term interests of the investment manager; and • have proper regard to the interests of relevant stakeholders. 3.3 Regulatory Regime for Managers The principal Cayman Islands legislation applicable to alternative fund managers is SIBA. SIBA provides for the licensing and control of persons engaged in a
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