CAYMAN ISLANDS Law and Practice Contributed by: Christie Walton, Patrick Rosenfeld and Philip Dickinson, Maples Group
The “public in the Cayman Islands” does not include: • any exempted or ordinary non-resident com - pany registered under the Cayman Islands Companies Act; • a foreign company registered pursuant to Part IX of the Companies Act; • a foreign limited partnership registered under Section 42 of the Cayman Islands Exempted Limited Partnership Act; • any company acting as general partner of a partnership registered under the Exempted Limited Partnership Act; or • any director or officer of the same acting in such capacity, or the trustee of any trust registered or capable of registration as an exempted trust under the Cayman Islands Trusts Act acting in such capacity. 2.3.8 Marketing Authorisation/Notification Process See 2.3.6 Rules Concerning Marketing of Alter- native Funds . 2.3.9 Post-Marketing Ongoing Requirements See 2.3.6 Rules Concerning Marketing of Alter- native Funds . 2.3.10 Investor Protection Rules There are no investor protection rules that restrict the ownership of fund interests to cer - tain classes of investors, except that a registered mutual fund must have a minimum initial invest- ment amount of KYD80,000 (or its equivalent in another currency). Such a fund is geared toward more sophisticated investors and is subject to lighter-touch regulation by CIMA. A mutual fund that has a minimum initial investment amount of less than KYD80,000 (other than a limited inves - tor fund) is subject to increased regulation by having to obtain a licence or having a “principal
office” provided by a CIMA-licensed mutual fund administrator. 2.3.11 Approach of the Regulator CIMA is a well-respected and dynamic regu - lator that consistently evolves its practice and approach to reflect the changing regulatory envi - ronment. CIMA has well-established consulta - tion processes that are mandated by statute and allow for co-ordinated feedback from industry. CIMA has historically adopted a light-touch approach to enforcement, looking to assist in remedying breaches and minimising the chanc - es of future errors rather than penalising regula - tory oversights. However, there are signs that this approach is shifting, largely in response to external assessments, and the use of active enforcement to drive compliance is anticipated, particularly in the light of recent powers granted to CIMA to impose administrative fines for regu - latory breaches without recourse to the judicial system. As such, in addition to offences for non-com - pliance set out in the Mutual Funds Act and the Private Funds Act, CIMA now also has the power to impose administrative fines for breaches of prescribed provisions of such Acts committed by entities and individuals. Breaches of prescribed provisions are catego - rised as being “minor”, “serious” or “very seri - ous”. There is a sliding scale of fines, as follows: • a fixed fine of KYD5,000 for minor breaches; • up to KYD50,000 for individuals or KYD100,000 for entities for serious breaches; and • up to KYD100,000 for individuals or KYD1 million for entities for very serious breaches.
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