In the face of economic sluggishness and regulatory change, the Cayman funds industry has marched steadily on – and looks set to prosper for many years to come, says Jarrod Farley of Carey Olsen.
The Cayman funds industry has been quietly and steadily continuing its growth trajectory over the past decade, shrugging off the temporary effects of the global financial crisis, despite ongoing sluggishness in the global economy.
The Cayman Islands is one of the most utilised international finance centres (IFC) in the Asian finance industry. The largest and most populous continent, Asia covers a diverse cultural landscape, with highly differing economies, laws and regulations and it is against this backdrop that the use of Cayman structures has been established as a legitimate and important channel for capital inflows and outflows between Asia countries and around the globe. In particular, they have been highly utilised across Asia in capital markets, structured finance, M&A, and in the funds industry, most notably in Hong Kong, Singapore, China and Japan.
In regard to the structure, set up and launch of innovative investment fund structures with specialization in investments in blockchain, ICO and cryptocurrency assets, this article includes a pragmatic list of fifty considerations and frequently asked questions for those interested in setting up a Cayman investment fund to invest into these asset classes.
As offshore funds counsel in the Cayman Islands, it may come as no surprise that, for me, 2017 has seen a distinct rise in requests to establish bespoke private equity and real estate funds for US managers and sponsors who have been successful in attracting investments from large Japanese institutional investors.
This alert highlights important changes to the regulatory and compliance regime for the Cayman Islands investment funds industry in 2018
It has become an established industry norm to see independent directors appointed to the boards of offshore hedge funds. It is no longer a 'check box exercise' to confirm independent directors have been appointed. Institutional investors are increasingly concerned about the composition of the board, the experience and skill set of its members and the day to day relationship between both the board members themselves and the board and the investment manager.
The European Securities and Markets Authority (ESMA) published on 19 July 2016 its final advice to the European Commission (the Commission) on the extension of the marketing passport under the Alternative Investment Fund Managers Directive (AIFMD) to 12 non-EEA countries, including the United States. This note is intended to highlight ESMA’s advice to the Commission and set out the steps firms would need to consider when applying for a third country passport.
In recent years and in the wake of the global financial crisis, international financial centres (IFCs) such as the British Virgin Islands (BVI) and the Cayman Islands (Cayman) have faced unprecedented political and regulatory pressure from governments and international organizations to open up and become more transparent in their business practices. Louise Groom, Joanna Hossack and Ian Montgomery discuss the implications for their position as domiciles for Shariah compliant SPVs.
Although the Foreign Account Tax Compliance Act (FATCA) went ‘live’ July 1, 2014, guidance continues to fall into place. On July 16, the IRS issued instructions for the requester of various Forms W-8 and continues to update its FAQ website. The Cayman Islands Tax Information Authority issued regulations effective July 4, 2014 addressing the implementation of the Cayman IGA, and on July 22 issued the first official version of its FATCA Guidance Notes.
The use of offshore companies in Islamic finance is driven by many of the same factors as in conventional banking, as tax efficiency, bankruptcy-remoteness and privacy are considerations common to most cross-border transactions. Louise Groom and Joanna Hossack write on how the Cayman Islands are in a fortunate position as the preferred jurisdiction for Islamic financing structures originating in the Middle East and the UK.
A typical “master-feeder” private investment funds structure uses a combination of corporate entities, including companies, limited partnerships and/or limited liability companies. Investment managers should consider the consequences associated with choosing one form instead of another early in the structuring process.
This briefing explains the attractions for international managers, sponsors and investors of the Cayman Islands as the jurisdiction in which to domicile a private equity fund.
Raymond Davern, Dennis Ryan and David Pytches look at the ways in which the various types of trust products in each jurisdiction may be of interest to MENA families as succession planning vehicles.
All involved with Cayman’s hedge fund industry have ‘lived in interesting times’ over the past few years. What developments have there been and how do things stand now? Paul Scrivener and Jonathan Fitzgibbons give their insight ‘from the trenches’.
Supermarket chains have recently started trying to drive their customers to buy their own brand ranges by promising that they taste at least as good as famous brands. They just lack the fancy packaging.
Fund management companies are trying to do the same with the launch of absolute return or UCITS III funds. Investment houses want investors to believe that they are getting more or less the same product as their hedge fund but without the mystique and risk of the Cayman Islands domicile.
The Cayman Islands has developed a reputation as a jurisdiction of choice for Islamic finance structures, including sukuk. However, the rights held by the investors in the event of default under such structures are largely untested.
Shariah principles must be applied when structuring Shariah-compliant financial products, including sukuk. These principles include the avoidance of riba, gharar (uncertainty or speculation in contracts), unjust enrichment and prohibited activities or investments (such as gambling- and alcohol-related investments).
The Mutual Funds Law (the "MF Law") first enacted in 1993, provides for the regulation of open-ended mutual funds and mutual fund administrators. Closed-end funds are not subject to regulation under the MF Law. Responsibility for regulation under the MF Law rests with the Cayman Island Monetary Authority ("CIMA") (which also supervises banks, trust companies, insurance companies and company managers), a statutory government body established under the Monetary Authority Law.
The Cayman Islands make up the world's fifth largest financial centre. There are approximately 580 licensed banks and trust companies in the Cayman Islands with assets of around US$747.6 billion. 47 of the world's 50 leading banks have a presence in the Cayman Islands.
Nick Delf is managing director of Singapore-based Maestro Capital Management, which is advisor to the Global Maestro Fund 1 Ltd, a Caymans based Macro fund. The fund will trade in a highly diversified set of markets across all asset classes and targets returns of around 20% and an annualised standard deviation of 10%. The fund is in the final stages of initial asset gathering and expects to launch in May.