Mutual Funds (Amendment) Law 2020 FAQs (2020-03-26)

Summary

This is a CIMA industry notice published as FAQs explaining practical requirements under the Mutual Funds (Amendment) Law 2020, which reclassified funds formerly exempted under section 4(4) of the Mutual Funds Law as 'Limited Investor Funds' subject to registration.

• Application process: How such funds must apply for registration.
• Documents and fees: What documents and fees are needed for registration.
• Registration date: How CIMA determines the registration date.
• Rejection: When an application may be rejected.

The notice also confirms that CIMA's 'four eyes' principle (minimum two directors, or two natural persons for a general partner/corporate director) applies to Limited Investor Funds.

• Audit obligations: Annual audited accounts must be prepared by a CIMA-approved auditor.
• Submission deadline: Audited accounts must be submitted together with the Fund Annual Return (FAR) within six months of financial year end, including for the 2020 financial year.

Transitional Scenarios

• Funds in wind-up: Funds already in liquidation/wind-up before the end of the transition period may avoid having to register if they provide evidence the wind-up will complete in time.
• Conversion to Registered Fund: Funds wishing to convert from a Limited Investor Fund (section 4(4)) to a Registered Fund (section 4(3)) must demonstrate compliance with the minimum initial investment threshold (CI$80,000/US$100,000) via affidavit, with under-threshold investors required to top up or be redeemed before conversion.

Key obligations

• Funds formerly exempted under section 4(4) of the Mutual Funds Law (now 'Limited Investor Funds') must apply for registration with CIMA via the REEFS portal (or the interim application form pending REEFS availability).
• Registration applications must include: Application Form, Offering Document/Summary of Terms/Marketing Material, Certificate of Incorporation/Registration, confirmation that a majority of investors can appoint/remove the operator(s), Auditor's letter of consent, Administrator's letter of consent (if applicable), and the Application Fee.
• All required documentation and fees must be submitted together before CIMA will begin processing the application; incomplete or incorrect submissions will be rejected.
• Corporate applicants must have a minimum of two directors, and a general partner or corporate director must name a minimum of two natural persons (four eyes principle).
• A copy of marketing materials, summary of terms, or the offering document must be submitted as part of registration.
• Limited Investor Funds must have their accounts audited annually by a CIMA-approved auditor.
• Limited Investor Funds must submit audited accounts together with the Fund Annual Return (FAR) to CIMA within six months of the end of each financial year, including for the 2020 financial year (or within any extension CIMA allows).
• A Limited Investor Fund already in liquidation/wind-up that will complete before the end of the transition period may avoid registration by submitting evidence (e.g., resolutions, auditor confirmation) to CIMA.
• Funds converting from a Limited Investor Fund (section 4(4)) to a Registered Fund (section 4(3)) must demonstrate compliance with the minimum initial investment requirement of CI$80,000 (US$100,000) via affidavit, and must ensure investors below that threshold increase their investment or are redeemed out prior to conversion.

Applies to

Limited Investor Funds (formerly section 4(4) exempted funds), Registered Funds, mutual funds

Deadlines

• within six months of the end of each financial year: Limited Investor Funds must submit audited accounts along with the Fund Annual Return (FAR) to CIMA.
• within six months of the financial year end (2020) or within such extension as CIMA may allow: Deadline for submitting the 2020 financial year audit for a Limited Investor Fund.