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The Cayman Islands Private Funds Law – FAQs for Lenders

The Cayman Islands Private Funds Law, 2020 (the “PF Law”) has been an increasingly prevalent topic in fund finance transactions since its introduction in February of this year.

As transactions have arisen (new subscription lines or amendments to existing facilities), most lenders have sought to directly address the implications of the PF Law. This has primarily occurred via the addition of affirmative covenants or other contractual provisions to the loan documents in respect of the requirement for private funds to register with the Cayman Islands Monetary Authority (CIMA), which is of material significance to lenders to such funds.

As a result of the negotiation of these provisions (primarily in respect of registration timing, evidence of registration and ongoing compliance requirements) we are seeing a number of similar queries related to these points. The below is a summary of the questions we are most frequently receiving from lenders and their legal counsel and our responses to them.

What is required for a private fund to ‘register’ with CIMA?

The CIMA registration process is extremely straightforward. A private fund simply authorizes its Cayman Islands legal counsel to upload the following documents to the CIMA secure online system (known as “REEFS’) along with submitting the required application fee:

  • REEFS Application Form
  • Certificate of Incorporation/Registration (as applicable)
  • Constitutive Documents (Memorandum & Articles of Association/Trust Deed/Declaration of Partnership, as applicable);
  • Offering Memorandum/Summary of Terms/Marketing Material (as applicable)
  • Auditor’s letter of consent (if appointment has been finalized by time of registration)
  • Administrator’s letter of consent (if applicable)
  • Structure Chart

What happens next? How long does it take for a private fund to register with CIMA?

The application is reviewed by CIMA and, assuming all of the documents, information and fees required have been provided, the private fund can expect its application to be approved and the private fund to be formally ‘registered’ within a number of days.

 

To continue reading full articles in PDF format:
The Cayman Islands Private Funds Law – FAQs for Lenders

 


Derek Stenson
Partner

Cayman Islands   +1 345 814 7392


Michael O’Connor
Associate

Cayman Islands   +1 345 814 7395


This article originally appeared in Cadwalader’s Fund Finance Friday newsletter: https://www.cadwalader.com/fund-finance-friday/.

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