Rule - Contents of Offering Documents - Regulated Mutual Funds (May 2020)

Summary

This is a CIMA Rule, effective May 2020, made under section 34 of the Monetary Authority Law and elaborating on section 4(6) of the Mutual Funds Law, which requires that an offering document for a regulated mutual fund describe the equity interests in all material respects and contain information necessary for a prospective investor to make an informed investment decision. The Rule applies to all funds licensed or registered under section 4 of the Mutual Funds Law and sets out a detailed, prescriptive list of the specific items that must be included in a fund's offering document.

Required Offering Document Content

• Fund identification: The fund's name, registered office, date of establishment, and financial year end.
• Share/equity interest details: Details of the share or equity interests offered.
• Subscription and redemption: Procedures for subscription and redemption.
• Investment objectives and risks: Description of investment objectives and associated risks.
• NAV calculation policy: The fund's policy for calculating net asset value.
• Fees and remuneration: Arrangements for fees and remuneration.
• Conflicts of interest: Disclosure of conflicts of interest.
• Side letter disclosure: Disclosure regarding side letters.
• Financial reporting: Frequency of financial reporting and the accounting standards used.
• Statutory disclaimer: A mandatory statutory disclaimer statement that CIMA's licensing or registration of the fund does not constitute an endorsement of the fund's performance or creditworthiness.
• Identities and experience disclosure: Disclosure of the identities and experience of the fund's operators, investment manager or advisor, auditors, administrator, custodian, prime broker, legal advisors, and any other persons significantly involved in the fund's affairs.

Breach of the Rule is addressed under CIMA's Enforcement Manual and other powers under the Mutual Funds Law and Monetary Authority Law. The Rule should also be read together with CIMA's Rule on the Calculation of Asset Values for Regulated Mutual Funds, since NAV Calculation Policy disclosure is one of the required content items.

Key obligations

• A regulated mutual fund's offering document must describe the equity interests in all material respects and contain information necessary for a prospective investor to make an informed decision.
• The offering document must include the fund's name, registered office address, date of incorporation/establishment, and financial year end.
• The offering document must disclose the place where the fund's constitution and annual/periodic reports may be inspected and obtained.
• The offering document must describe the fund's authorised/issued shares (for companies), rights and restrictions attaching to equity interests, and any stock exchange listings.
• The offering document must set out procedures and conditions for issue, sale, redemption, and repurchase of equity interests, including minimum initial investment and suspension circumstances.
• The offering document must describe investment objectives, policy and limitations, material risks, and any borrowing powers or techniques used.
• The offering document must describe the fund's NAV Calculation Policy and any expected material involvement of the investment manager/advisor in portfolio pricing.
• The offering document must disclose remuneration arrangements for the operator, administrator, investment advisor/manager, custodian and other service providers.
• The offering document must describe potential conflicts of interest between the fund, its operator and service providers.
• The offering document must include a statement confirming the power to enter into side letters providing more favourable redemption-related treatment to certain investors.
• The offering document must state whether the fund is registered/licensed (or intends to be) with any non-Cayman regulatory authority.
• The offering document must disclose the nature and frequency of financial reports to investors and the accounting principles/reporting standards used.
• The offering document must include the mandatory prescribed CIMA disclaimer statement verbatim.
• The offering document must name and provide address/experience details for the fund's operator(s), investment advisor/manager and its principals, auditors, administrator, custodian and sub-custodian, prime broker, legal advisors, and any other persons significantly involved in the fund's affairs.

Applies to

regulated mutual funds (licensed or registered under s.4 of the Mutual Funds Law)

Related documents

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