CAYMAN ISLANDS: Cayman Islands Government Publishes New AIFMD Regimes

Thursday July 16 2015

The Cayman Islands Government published two bills (Bills) on 10 July 2015 which are intended to establish new ‘opt in’ regulatory regimes for the Cayman Islands. The Bills are consistent with the Alternative Investment Fund Managers Directive (‘AIFMD’).

Mutual Funds (Amendment) Bill 2015

This Mutual Funds (Amendment) Bill 2015 would amend the Mutual Funds Law (2013 Revision) (the principal Law) to make provision for the management and marketing of EU Connected Funds under the Alternative Investment Fund Managers Directive (AIFMD) in Member States of the European Union; and provide for incidental and connected purposes.

The Bill amends section 2 of the principal Law so that relevant terms necessary for the implementation of the AIFMD are included in the principal Law.

Additionally, the Bill inserts an application clause so that the principal Law applies not only to regulated mutual funds but also to EU Connected Funds.

The Bill also inserts Part III A which is to be headed “EU Connected Funds” and which sets out the process by which such funds may elect to be licensed or registered under the Law. This clause also defines the words “attestation” and “confirmation of status” and empowers the Authority to issue letters of attestation for an EU Connected Fund which is not regulated but sets out the conditions which must be satisfied prior to the provision of these letters by the Authority.

Finally, Clauses 5, 6, 7, 8, 9, 10 and 11 all make provision for consequential amendments necessary so that the powers of supervision and enforcement of the Authority and the ability to appeal against a decision of the Authority in relation to licensing or registration extend to an EU Connected Fund.

Securities Investment Business (Amendment) Bill 2015

The Securities Investment Business (Amendment) Bill 2015 would make provisions for the regulation of EU Connected Fund Managers under the Alternative Investment Fund Managers Directive and provide for incidental and connected purposes.

Similar to that of the Mutual Funds Bill, the Bill amends section 2 of the principal Law so that relevant terms necessary for the implementation of the AIFMD are included in the principal Law.

Furthermore, the Bill amends section 5 which sets out the requirements for entities to be licensed under the principal Law. This section also makes provision for the entities which are exempt from the licensing regime under the principal Law. The clause makes provision for entities that are currently licensed and entities which do not presently require a licence to elect to be registered or licensed under the principal Law. It also provides that entities making this election would be agreeing to be subjected to the current regulatory powers of the Authority as prescribed under the principal Law.

The Bill also makes provision for activities related to EU Connected Funds to be included in the activities that meet the requirements of securities investment business under the principal Law.

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