The Cayman Islands Government passed the Private Funds (Amendment) Act, 2020 (the “Amendment”) on 7 July 2020.
The Amendment amends the Private Funds Act, 2020 to, amongst other things, clarify the definition of “private fund” and require that conflicts of interest arising in relation to valuation, safekeeping of fund assets and cash monitoring are managed and monitored.
The definition of “private fund” now means a company, unit trust or partnership that offers or issues or has issued investment interests, the purpose or effect of which is the pooling of investor funds with the aim of enabling investors to receive profits or gains from such entity’s acquisition, holding, management or disposal of investments, where
- the holders of investment interests do not have day-to-day control over the acquisition, holding, management or disposal of the investments; and
- the investments are managed as a whole by or on behalf of the operator of the private fund, directly or indirectly, but does not include — (i) a person licensed under the Banks and Trust Companies Act (2020 Revision) or the Insurance Act, 2010; (ii) a person registered under the Building Societies Act (2020 Revision) or the Friendly Societies Act (1998 Revision); or (iii) any ‘non-fund arrangements’.
Amendments have also been made to section 16 - valuation, section 17 - safekeeping of fund assets and section 18 - cash monitoring - whereby “managed, monitored” has been inserted after “identified” in those sections.
The effect of the Amendment is that more entities will now be caught by the Private Funds Act , 2020 and be required to register with the Cayman Islands Monetary Authority (“CIMA”). In addition, private funds will need to further consider their current operating conditions to ensure compliance with the Amendment.
Read last update on the New Private Funds Act 2020 and Mutual Funds (Amendment) Act 2020.