CAYMAN ISLANDS Law and Practice Contributed by: Sailaja Alla, Matt Mulry, Maree Martin and James Mossetto, Appleby
• exempted limited partnerships and limited liability partnerships established in the Cayman Islands; and • trustees of certain registered trusts (collectively, “Permitted Offerees”). If offering to persons/entities who are not Permit - ted Offerees, the non-Cayman Islands fund will be required to either: • register/obtain a licence under the MFA or PFA, as applicable; or • make an invitation to subscribe for interests by or through a person who holds an appropriate licence under SIBA, provided that those interests are listed on an approved stock exchange or the non- Cayman Islands fund is regulated by an approved overseas regulatory authority. Cayman Islands Funds The investment vehicles (eg, exempted companies, exempted limited partnerships or limited liability companies) commonly used for structuring Cayman Islands funds are not permitted to undertake busi - ness with persons in the Cayman Islands, except for the furtherance of the business of the fund carried on exterior to the Cayman Islands. Consequently, Cayman funds, unless they are listed on the Cayman stock exchange, are not permitted to offer interests to the “public in the Cayman Islands”. Permitted Offerees are not included in the definition of “public in the Cayman Islands” and such persons are permitted to invest in Cayman Islands funds. 4.4 Rules Concerning Marketing of Alternative Funds Depending on the nature of the activities, any firm marketing or advertising funds from or into the Cay - man Islands might trigger SIBA. Please see 3.3 Regu- latory Regime for Managers . Although there are no required regulatory filings in respect of marketing, CIMA has issued a Market - ing Policy applicable to licensed funds only. Such policy requires licensed funds to refrain from the use of aggressive marketing policies based exclusively or primarily on confidentiality or secrecy in order to
attract business. Licensed funds are also expected to demonstrate a high level of responsibility in the mar - keting of all their services. 4.5 High Net Worth or Retail Investors While there is no specific product or distribution chan - nel exclusively tailored for high net worth investors, the regulatory framework governing investment funds in the Cayman Islands is primarily designed to attract institutional and high net worth clientele. As noted in 1.1 General Overview of Jurisdiction , Cayman-based funds offer a variety of advantages that make them particularly attractive to high net worth investors. Although the Cayman Islands is not traditionally rec - ognised as a retail fund jurisdiction, with licensed funds being the least common category of regulated mutual funds, there has been a noticeable shift. The rise of digital platforms has made it easier for retail investors to access Cayman-based funds. These plat - forms reduce the minimum investment requirements, often through fractionalised ownership or tokenised assets, thus opening up access to alternative invest - ment strategies typically offered by Cayman funds. 4.6 Private Placements See 4.5 High Net Worth or Retail Investors in con - nection with marketing non-Cayman Islands funds in the Cayman Islands. There are no specific legal requirements or limitations governing reverse solici - tation in the Cayman Islands. 4.7 Compensation and Placement Agents The use of placement agents is permitted and com - mon for Cayman Islands funds. Acting as a placement agent in or from the Cayman Islands will generally constitute “securities investment business” and will trigger SIBA requirements. Please see 3.3 Regulatory Regime for Managers . No restrictions or special rules apply to compensation of a manager’s personnel for sales efforts. 4.8 Tax Regime for Investors Please see 2.4 Tax Regime for Funds .
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