Investment Funds & Fund Formation in the Cayman Islands
Stuarts Humphries is a specialised investment funds firm and a leading provider of legal services to investment funds in the Cayman Islands. We have an experienced team of investment funds lawyers who offer world-class and in-depth market knowledge, understanding and expertise in relation to the investment funds market.
The Investment Funds Team
Our Investment Funds Team in the Cayman Islands is a market leader in advising managers on the set-up and establishment of a broad range of investment funds in the Cayman Islands, including hedge funds, real estate funds, private equity funds and funds focusing on blockchain, cryptocurrency and other digital assets strategies.
Our Investment Funds Team, (which includes recognised leaders in their field) provides offshore legal advice on fund formation, structures, regulation, de-registration, liquidation and on-going advice to investment funds, managers and institutional investors including the following:
Development of the fund legal structure and formation issues of the fund vehicles including multi-class/series funds and master/feeder funds
Liaison and coordination with legal counsel and regulators
Obtaining regulatory approvals
Advising clients who utilise a wide variety of investment strategies including those who focus on cryptocurrencies (such as Bitcoin, Ethereum, Litecoin)
Our Investment Funds Team has an experienced and dedicated team of industry focused lawyers, recognised in their field, advising fund managers on the establishment and regulation of open-ended funds in the Cayman Islands across the full range open-ended fund structures, including:
Our Investment Funds Team has extensive experience advising fund managers and institutional investors on all aspects of the establishment and regulation of closed-ended fund in the Cayman Islands, across a full range of structures including:
Stuarts has a dedicated and enthusiastic team of professionals advising on all aspects of offshore private equity transactions in addition to fund formation, the formation of alternative investment vehicles, international leveraged buy outs and equity financing where the structure involves offshore jurisdictional advice. We assist in the implementation of IPOs, company sales or mergers and recapitalisation and advise on structuring, secured lending and due diligence.
The funds industry has undergone some significant changes in recent years as many investment managers seek to capitalise on the potentially huge gains associated with cryptocurrencies, blockchain and other digital assets. The Cayman Islands has fast become one of the leading markets for cryptocurrency funds, Security Token Offerings (STOs), and other digital and blockchain products in part due to its attractive regulatory environment.
Stuarts specialist funds team advise investment managers on the establishment of Cayman Islands investment management entities and ensuring they meet appropriate economic substance requirements as well as ongoing regulatory obligations set out in the Securities Investment Business Law of the Cayman Islands.
Specifically, our team advises on:
Securities Investment Business Law: Investment managers establishing an entity in the Cayman Islands must comply with the regulatory requirements under the Securities Investment Business Law. Stuarts will provide advise and guide you through these requirements.
Economic Substance: Our funds attorneys advise on local economic substance requirements for fund managers and any appropriate outsourcing arrangements that may be required. We advise on whether an entity is in scope of the substance rules and guide the directors in their consideration of the rules and any remediation plans. In order to facilitate our clients to meet their needs, Stuarts is able to offer a full range of services as a framework upon which our clients can build a physical presence in the Cayman Islands. See our Framework Office Service page for more information.
Immigration: Stuarts is also well placed to assist with the relocation of employees to the Cayman Islands and assist with work permit requirements and assist with other relocation needs. See our Immigration page for more information.
Special Economic Zone: Our specialist funds team assist Managers who wish to have a physical presence in the Cayman Islands to establishes themselves in the special economic zone in the Cayman Islands. See our Cayman Special Economic Zone page for more information.
Institutional Investors
Our Investment Funds Team has extensive experience advising institutional investors on all aspects of their participation in Cayman Islands funds, across a full range of structures including:
Negotiation of Side Letter
Advice in relation to the offering documents of funds and the conditional documents
Hedge Funds
Our hedge fund lawyers provide advice to some of the largest and most prestigious hedge fund clients on all aspects of the life-cycle of their hedge funds, including advising on downstream transactional matters.
Our hedge fund lawyers also advise on all legal aspects affecting the continuing operations of hedge funds, including specialist advice to hedge fund managers as well as contentious issues.
Mutual Funds
The Mutual Funds Act (the “MFA”) defines a mutual fund as a company, a unit trust or a partnership that issues equity interests, the purpose or effect of which is the pooling of investor funds with the aim of spreading investor risk and enabling investors to receive profits or gains from the acquisition, holding, management or disposal of investments.
The MFA applies to all open-ended funds (funds in which the investors have the right to redeem their interests at their option), except those specifically excluded from regulation. Therefore, any tokens which are issued by a fund which carry an entitlement to participate in the profits or gains of the company will require registration under the MFA if they are redeemable at the option of the holder.
Our funds attorneys will advise if a mutual fund is the right fit for your investment project.
Restructuring and Recovery of Distressed Funds
Our Cayman funds attorneys provide restructuring advice to creditors, shareholders and other stakeholders of distressed funds and portfolio companies. We provide advice in relation to enforcement options to creditors and regularly advise liquidators, directors and shareholders of distressed funds. Our Distressed Funds Team has been instructed in connection with many of the largest fund insolvency events in the Cayman Islands and the services offered include:
Advising funds and their directors on winding down or restructuring funds' affairs and the use of side pockets
Advising on the deregistration and liquidation of a broad range of investment funds
Advising on disputes between funds and investors on subscription terms and the interpretation of side letters
Acting for funds and service providers on NAV mis-pricing cases, claims against directors and audit negligence disputes
Acting for leverage providers and counter-parties to distressed funds
AML and Regulatory Services for Funds
The scope of regulatory requirements in the Cayman Islands has increased significantly in recent years and requires Cayman-domiciled entities to meet ongoing regulatory filing requirements, in addition to other obligations as set out by the regulatory bodies of the Cayman Islands. By staying informed and seeking guidance from experts, Cayman entities can navigate the complexities of the regulatory landscape with clarity and ease. See our AML and Regulatory Services here.
Stuarts Investment Funds and Regulatory teams have extensive experience advising funds and other regulated entities in the Cayman Islands on corporate governance and compliance matters. Through our subsidiaries, Stuarts Corporate Services and Southern Management Services our team of experienced corporate professionals can provide you with a full suite of corporate governance and directorship services including Cayman resident directors and corporate secretarial services, to assist in meeting the ongoing regulatory obligations of your fund and regulated entities in the Cayman Islands.
The Investment Funds Landscape in the Cayman Islands
The Cayman Islands has been the leading offshore jurisdiction for the establishment of mutual funds and private funds for more than 30 years. Its phenomenal reputation has been due in part to the use of innovative legislation and the absence of taxation and exchange controls. This, together with the presence of sophisticated and professional service providers has resulted in the jurisdiction’s reputation for responsible supervision and regulation of funds. Strengthening its position as a global leader, the Cayman Islands has introduced innovative legislation to regulate virtual asset service providers, opening the doors to the digital asset marketplace.
It is no surprise therefore that when fund managers and virtual asset service providers are looking for the best jurisdiction to establish alternative funds investing in cryptocurrencies, Web3 and blockchain products and to set up digital asset entities, the Cayman Islands is the jurisdiction of choice.
The Cayman Islands is the leading offshore centre for the establishment of institutional and hedge funds. There are approximately 11,000 open-ended, regulated funds registered with the Cayman Islands Monetary Authority (“CIMA”).
Click here to read our Investment Funds Overview Factsheet or check out our Quarterly Securities and Investments Updates on the News & Insights section.
Discuss your requirements with our investment funds lawyers in the Cayman Islands
If you would like to receive further information regarding Investment Funds Services in the Cayman Islands, please email: Chris Humphries.
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