Engage an onshore and/or offshore Legal Counsel to assist in drafting an offering document setting out the terms of the offering and the fund’s shares. The Legal Counsel should then prepare the Memorandum and Articles of Association, which will be used to set up the company, to conform to the offering document. Next, incorporate the exempt limited liability company with the Registrar of Companies and register the fund with the CIMA.
*Most funds are registered with CIMA under Section 4(3) of the Mutual Funds Law (2015 Revision). Funds may be exempt from registration and the registration exemption includes funds with 15 or less investors or closed ended.
Investment Managers may already have an investment company formed in another jurisdiction, if so, this can be used as the Management Company and it is not a requirement to set up a Cayman management company.
If there is no existing management company, the first step is to engage a Cayman attorney to prepare the Memorandum and Articles of Association.
The management company is typically established as an exempt limited liability company with the Registrar of Companies and licensed by CIMA under the Securities Investment Business Law (2015 Revision), unless it qualifies for an exemption from registration.
*Usually an investment management company would seek to fall under paragraph 4 of the Fourth Schedule of the Securities Business Law which requires the investment management company to carry on securities investment business exclusively for one or more of the following classes of person:
- A sophisticated person (this includes a fund registered with CIMA).
- A high net worth person.
- A company, partnership or trust (regulated or not) of which the shareholders, unit holders or limited partners are one of more persons falling within (1) or (2).
If the investment management company qualifies for an exemption it will not need to obtain a license for investment business. However, the company will need to file with CIMA declaring that the investment manager is an “excluded person” and pay an initial and annual CIMA filing fee.