Retail Mutual Funds (Japan) Regulations (2023 Revision)

Summary

This is the consolidated 2023 Revision of the Retail Mutual Funds (Japan) Regulations, made under the Cayman Islands Mutual Funds Act. The regulations apply specifically to Cayman Islands mutual funds licensed under section 4(1)(a) of the Mutual Funds Act that have made or intend to make a public offering of their securities in Japan, subject to grandfathering exceptions for funds already offering into Japan before 17 November 2003, unless they elect in writing to be covered. The document sets out a detailed regulatory regime covering the fund's constitution, pricing and reporting to investors, and the appointment, functions and delegation powers of the administrator, custodian and investment adviser, as well as financial reporting, audit and prospectus content requirements.

• Investor disclosure and reporting: Retail (Japan-offered) mutual funds must make their constitutional documents available to investors, publish issue/redemption prices, and produce annual reports with audited financial statements.
• Administrator obligations: Administrators must file exception reports and notify CIMA of suspensions or liquidations.
• Operator reporting to CIMA: Operators must submit periodic activity reports and annual compliance declarations to CIMA.
• Service provider appointment: Administrators, custodians and investment advisers must be appointed and approved by CIMA, with prior notice and approval required before changes are made, and their respective functions and delegation arrangements are prescribed in detail.
• Prospectus content: The prospectus must contain extensive prescribed disclosures, including a mandatory CIMA disclaimer statement.

This is a consolidated/revised version of regulations originally made in 2003 and amended in 2006, 2012 and 2020; it does not itself introduce new substantive changes beyond consolidating prior amendments, and includes a savings/transitional provision preserving licences in force before the 2012 amendment's commencement date.

Key obligations

• A retail mutual fund must make its constitution available for inspection without charge to investors and prospective investors, and provide copies on payment of reasonable costs.
• A retail mutual fund must make the most recent issue and redemption/repurchase prices available on request without charge at the administrator's office.
• A retail mutual fund must prepare and distribute an annual report, including audited financial statements, within six months of the end of its financial year (or an earlier date specified in the prospectus).
• An administrator that becomes aware of non-compliance with investment objectives/restrictions or the constitution/prospectus must report in writing to the operator as soon as possible and submit a copy to the Authority, with inclusion in the next annual/interim report.
• An administrator must notify the Authority as soon as practicable of any suspension of subscriptions/redemptions/repurchases or any intention to liquidate the fund, with reasons.
• An operator must submit or cause to be submitted to the Authority a written activity report within twenty days after the end of the six-month period following the end of each financial year, containing specified fund data (NAV, subscriptions, redemptions, securities in issue, etc.).
• An operator must submit an annual declaration to the Authority confirming compliance with investment guidelines/restrictions and constitution, and that the fund has not operated in a manner prejudicial to investors or creditors.
• A retail mutual fund must appoint and maintain an administrator approved by the Authority.
• A retail mutual fund must give written notice of any proposed change of administrator to the Authority, investors and other service providers at least one month before the change, and must obtain prior Authority approval before making the change.
• The administrator must ensure issuance, transfer, conversion and redemption of securities, and NAV/pricing calculations, are carried out in accordance with the constitution, prospectus, subscription agreement and applicable laws.
• The prospectus must include prescribed content, including a mandatory statement disclaiming CIMA responsibility for fund performance or creditworthiness, details of service providers, and other prescribed disclosures.
• Auditors must be appointed, and their consent, independence, and adherence to generally accepted accounting principles must be maintained per the regulations.

Applies to

retail mutual funds, administrators, custodians, investment advisers, auditors, operators of retail mutual funds

Deadlines

• within six months of the end of its financial year: Deadline for a retail mutual fund to prepare and distribute its annual report, including audited financial statements, to investors.
• within twenty days after the end of the six month period following the end of each financial year: Deadline for the operator to submit a written activity report on the fund to the Authority.
• not less than one month before such change: Notice period required before a retail mutual fund changes its administrator, to be given to the Authority, investors and other service providers.
• 31st August, 2012: Commencement date of the Retail Mutual Funds (Japan) (Amendment) Regulations, 2012, referenced in the savings and transitional provision preserving licences in force immediately before that date.

Related documents

• This document replaces Retail Mutual Funds (Japan) Regulations (2018 Revision)