Private Funds Law 2020 FAQs (2020-03-03)

Summary

This is a March 2020 CIMA general industry notice presenting Frequently Asked Questions (FAQs) about the Private Funds Law, 2020 (PFL). It is guidance explaining how CIMA will interpret and administer the registration process and ongoing requirements for Private Funds, rather than a standalone legal instrument itself.

• How to apply for registration
• What documents and fees are required
• The two-director/four-eyes requirement for corporate applicants and general partners
• Treatment of Alternative Investment Vehicles (AIVs)
• Audit requirements
• Valuation requirements
• Cash monitoring requirements

The FAQs apply to entities that fall within the definition of a 'Private Fund' under the PFL, including their general partners, corporate directors, and related investment managers/administrators.

• Registration process: Applications must be submitted electronically via CIMA's REEFS portal with a specified set of documents: application form, constitutive documents, offering memorandum/marketing materials, auditor's and administrator's letters of consent, structure chart, and fee. The registration date will be the date a complete application is received.
• Winding-up exception: Funds already in the process of winding up before the end of the transition period may avoid registration by submitting evidence of the impending liquidation.

• Annual audits: Audits by a CIMA-approved auditor are required, with submission of audited accounts and the Fund Annual Return (FAR) within six months of financial year end.
• Annual valuation: Fund assets must be valued annually in accordance with the fund's valuation policy.
• Cash monitoring: A cash monitoring process must be implemented, which can be done internally or via a third party, subject to auditor confirmation.

CIMA notes it will issue further rules on valuation and cash monitoring policies and procedures.

Key obligations

• Submit Private Fund registration applications electronically via CIMA's REEFS portal with all required documents (application form, certificate of incorporation, constitutive documents, offering memorandum/marketing materials, auditor's letter of consent, administrator's letter of consent if applicable, structure chart) and the application fee before processing begins.
• Corporate applicants, and general partners or corporate directors of a Private Fund, must have a minimum of two natural persons/directors named (four-eyes principle).
• Submit a copy of marketing materials, summary of terms, or offering document as part of the registration process.
• Report any changes to information regarding Alternative Investment Vehicle (AIV) entities to CIMA as part of the Private Fund's ongoing obligations.
• A Private Fund already in liquidation/wind-up prior to the end of the transition period must submit evidence (e.g., resolutions, auditor confirmation) to CIMA to avoid the requirement to register.
• Have accounts audited annually by a CIMA-approved auditor pursuant to section 13(1) of the PFL.
• 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, unless CIMA grants an extension).
• Conduct valuation of the Private Fund's assets in accordance with the fund's valuation policy, at least annually.
• Implement a cash monitoring process, either internally (by the investment manager) or via a third-party service provider; if done internally, the fund's auditor must confirm the process was carried out throughout the year when signing off the audited financial statements.

Applies to

Private Funds, general partners, corporate directors, investment managers, administrators, auditors

Deadlines

• within six months of the end of each financial year: Private Funds must submit audited accounts and the Fund Annual Return (FAR) to CIMA within this period after financial year end.
• within six months of the financial year end (2020) or within such extension as CIMA may allow: A Private Fund is required to submit an audit for its 2020 financial year within this timeframe.