Statement of Guidance: Non-Fund Arrangements (November 2020)

Summary

This is CIMA's November 2020 Statement of Guidance explaining which types of arrangements fall outside the definition of a 'private fund' under the Private Funds Law, 2020, and therefore do not need to register with CIMA as a private fund. It supplements the Private Funds Law, the Private Funds Regulations, 2020, the Private Funds (Savings and Transitional Provisions) Regulations, 2020, and related legislation, and sets out CIMA's approach to assessing whether an entity or structure is a 'non-fund arrangement' as referenced in the Schedule to the Private Funds Law.

The guidance lists 25 categories of arrangements that CIMA will treat as non-fund arrangements, including the following:

• Pension funds
• Securitisation special purpose vehicles
• Contracts of insurance
• Joint ventures
• Proprietary vehicles
• Employee incentive/compensation schemes
• Holding vehicles
• Individual investment management arrangements
• Pure deposit-based schemes
• Arrangements not operated by way of business (e.g. family trusts)
• Debt issues/debt issuing vehicles
• Common accounts
• Franchise arrangements
• Timeshare schemes
• Certificate/instrument schemes
• Clearing and settlement services
• Funeral plan contracts
• Structured finance vehicles
• Preferred equity financing vehicles
• Listed funds specified by Gazette notice
• Occupational/personal pension schemes (with an exception for feeder funds)
• Sovereign wealth funds
• Single family offices

The document does not itself create registration duties; rather it is interpretive guidance used by CIMA, and by entities and their advisers, to determine whether registration under section 5 of the Private Funds Law is required. Entities structuring or operating in the Cayman Islands should compare their arrangement against these categories to assess registration exposure, but the SoG imposes no new filing, reporting, or notification requirements and contains no deadlines.

Key obligations

• Entities seeking to register, or already registered, as a private fund should assess their structure against the SoG's criteria to determine whether it instead qualifies as a non-fund arrangement exempt from registration under section 5 of the Private Funds Law.
• Arrangements relying on the proprietary vehicle exemption must ensure capital invested by proprietary investors is entirely proprietary capital.
• Arrangements relying on the individual investment management exemption must ensure there is no pooling of capital, risk and return across clients (with group members treated as a single client).
• Arrangements relying on the securitisation vehicle exemption must ensure their sole purpose is securitisation or activities appropriate to accomplish that purpose.
• Arrangements relying on the pure deposit-based scheme exemption must ensure the whole of each participant's contribution is a deposit accepted by a person authorised to accept deposits.

Applies to

private funds, pension funds, securitisation special purpose vehicles, insurers (contracts of insurance), joint ventures, proprietary vehicles, employee incentive/compensation scheme operators, holding vehicles, individual investment managers, deposit-taking institutions, debt issuing vehicles, common account arrangements, franchise arrangements, timeshare and long-term holiday product schemes, clearing houses/authorised persons providing clearing services, central securities depositories/settlement service providers, funeral plan providers, structured finance vehicles, preferred equity financing vehicles, sovereign wealth funds, single family offices

Related documents

• This document is made under Monetary Authority Law (2020 Revision)