private funds

Who is caught

The core statute is the Private Funds Act (2025 Revision), which governs 'private funds' in the Cayman Islands. Broadly, these are companies, unit trusts and partnerships that pool investor money for collective investment where investors do not have day-to-day control over the assets. Falling within that definition brings an entity within CIMA's registration and supervisory framework.

• Entity types: Companies, unit trusts and partnerships that pool investor funds for collective investment where investors lack day-to-day control, together with their operators (directors, trustees, general partners, LLC managers), managers, administrators, auditors and custodians.
• Excluded entities: The Act excludes certain licensed banks and insurers, building and friendly societies, and specified 'non-fund arrangements' listed in the Schedule (for example pension funds, joint ventures, single family offices and securitisation SPVs).
• Tokenised private funds: The Private Funds (Amendment) Act, 2026 creates a specific regime for 'tokenised private funds' - private funds whose investment interests are represented in whole by digital investment tokens - and their operators, layering extra obligations on top of the base Act.
• Regulatory law status: The Monetary Authority (Amendment) Law, 2020 added the Private Funds Law to the definition of 'regulatory laws' in the Monetary Authority Law, so CIMA's regulatory and enforcement powers extend to matters arising under the Private Funds regime.

CIMA guidance elaborates the boundary of the definition. The Private Funds Law FAQs address concepts such as collective investment scheme, pooling of investor funds and spreading of investment risks, and the Statement of Guidance on Non-Fund Arrangements lists 25 categories of arrangements that CIMA treats as outside the private fund definition.

Sources: Monetary Authority (Amendment) Law, 2020 (Law 3 of 2020) · Private Funds (Amendment) Act, 2026 (Act 6 of 2026) · Private Funds Act (2025 Revision) · Statement of Guidance: Non-Fund Arrangements (November 2020) · Private Funds Law FAQs Update (2020-05-07)

Key duties

Registered private funds must register with CIMA before operating and remain subject to CIMA's risk-based supervision. The recurring, deadline-bearing obligations are the annual return and annual audit, both tied to the fund's financial year end.

Registration and fees

• Registration: In-scope private funds must register with CIMA before operating, unless within an exemption or non-fund arrangement, and must inform CIMA of changes to registered details.
• Annual registration fee: Under the Private Funds (Fees) (Amendment) Regulations, 2025 the base annual registration fee is CI$4,125, with additional charges of CI$525 for each alternative investment vehicle, each segregated portfolio (for segregated portfolio companies), and each other class with individually presented separate accounts.
• Application and change fees: The Private Funds (Fees) Regulations, 2024 set the registration application fee and the fee for filing details of a change; note these figures are stated in US dollars in that instrument while the 2025 amendment expresses the annual fee in CI dollars.

Annual filings and audit

• Annual return: Every registered private fund must file an annual return with CIMA in the prescribed form for each financial year, within six months after its financial year end (or any extension CIMA allows), covering general, operating and financial information and including a declaration confirming compliance with the valuation, safekeeping and cash monitoring provisions (sections 16 to 18).
• Annual audit: Registered private funds must have their accounts audited annually by a CIMA-approved auditor with a physical presence in the Cayman Islands, prepared under IFRS or the GAAP of the US, Japan, Switzerland or a non-high-risk jurisdiction, and submit the audited accounts within six months of the financial year end (per the FAQs, together with the Fund Annual Return).
• Auditor duties: Auditors must immediately notify CIMA in writing where they obtain information or suspect the fund is insolvent or likely to become so, is winding up prejudicially, lacks adequate accounting records, is acting fraudulently or criminally, or is otherwise non-compliant.
• Auditor changes: A fund removing its auditor must notify CIMA in writing of the reasons and the proposed replacement, and may not reappoint a previously removed auditor unless CIMA is satisfied it will comply going forward.

Ongoing operating conditions

• Valuation and NAV: Funds must maintain and apply appropriate valuation policies, with assets valued at least annually. The CIMA Rule on Calculation of Net Asset Values requires a written NAV Calculation Policy that is fair, reliable and verifiable, following prescribed accounting standards, with operator oversight and at least annual review.
• Safekeeping and segregation: Funds must arrange safekeeping or custody of custodial fund assets and identification of other fund assets. The Segregation of Assets Rule requires the fund's portfolio to be segregated and accounted for separately from the assets of the manager, operator or Section 17 person, who may not use the portfolio to finance their own operations.
• Cash monitoring: Funds must implement cash monitoring procedures, conducted internally with independent verification or by an appointed third-party service provider.
• Securities identification: Funds must identify securities held using appropriate identifiers such as ISIN where applicable.
• Record keeping: Funds must retain records as required under the Act.
• Marketing material: The Contents of Marketing Material Rule prescribes minimum disclosures for marketing material, including corporate details, investment terms, NAV policy, fees, conflicts, service provider identification and a mandatory statutory disclaimer about CIMA registration.
• Corporate governance: The Rule on Corporate Governance for Regulated Entities requires a documented governance framework and a governing body, with a duty to notify the regulator by email within ten days of any substantive issue that could materially affect the entity; the related Statement of Guidance sets CIMA's expectations for fund Operators.

Tokenised private funds

• Records and annual confirmation: A tokenised private fund must maintain records of the issuance, creation, sale, transfer and ownership of tokenised interests and make them available to CIMA, and its operator must confirm annually that these records are properly kept.
• Transfer approval: A tokenised investment interest is transferrable only with the operator's approval, in accordance with the offering document.
• Risk disclosure: The offering document must disclose token-specific risks (including cybersecurity and transferability) and how they are mitigated, and the fund must comply with any characteristic restrictions and periodic reporting CIMA imposes.

Cessation and cancellation

• Notification of cessation: Under the Cancellation Rule a fund must notify CIMA within 21 days of ceasing or intending to cease business, or within 21 days of a resolution that it never carried on and will not commence business.
• Cancellation requirements: To cancel its registration a fund must be in good standing (all fees paid, audited financials filed, no outstanding queries), return the original certificate (or affidavit if lost), pay the surrender fee, and submit a certified resolution stating the cessation date plus scenario-specific documentation.

Sources: Private Funds (Amendment) Act, 2026 (Act 6 of 2026) · Private Funds (Annual Returns) Regulations (2026 Revision) · Private Funds (Fees) (Amendment) Regulations, 2025 (SL 70 of 2025) · Private Funds (Fees) Regulations, 2024 · Private Funds Act (2025 Revision) · Rule - Cancellation of Licences or Certificates of Registration for Regulated Mutual Funds and Private Funds (August 2022) · Regulatory Procedure - Cancellation of Certificates of Registration for Registered Private Funds · Regulatory Policy - Local Audit Sign-off for Private Funds · Statement of Guidance - Corporate Governance for Mutual Funds and Private Funds (April 2023) · Rule - Calculation of Net Asset Values - Registered Private Funds (July 2020) · Rule - Segregation of Assets - Registered Private Funds · Rule - Contents of Marketing Material - Registered Private Funds · Private Funds Law FAQs Update (2020-05-07) · Cancellation Procedures for Regulated Private Funds (2020-10-09) · Rule on Corporate Governance for Regulated Entities (April 2023) · TMF-147-22 v2 – Termination of Mutual and Private Fund Application Form Completion Guide

Exemptions and carve-outs

The instruments provide several carve-outs, both at the definitional level and through discretionary waivers granted by CIMA.

• Non-fund arrangements: Arrangements meeting the Schedule's 'non-fund arrangement' categories fall outside the private fund definition and do not need to register. CIMA's Statement of Guidance lists 25 such categories, including pension funds, securitisation SPVs, joint ventures, proprietary vehicles, holding vehicles, sovereign wealth funds and single family offices.
• No capital contributions: A fund that has not received capital contributions for investment purposes is not subject to Part 3 of the Act, but its operator must file a declaration with CIMA to this effect (in the prescribed form) within six months after the relevant financial year end.
• Audit waiver: A registered private fund that has received capital contributions may apply for an exemption from the annual audit requirement, granted only in exceptional circumstances such as unsuccessful capital raising, bankruptcy or enforcement proceedings, or specified liquidation, transfer or merger scenarios.
• Valuation exemption: CIMA may exempt a fund from the section 16 valuation requirements, wholly or conditionally, only in exceptional cases (for example court-frozen assets, repatriation under a mutual legal assistance treaty, unlaunched funds, or funds in compulsory liquidation), for a period not exceeding one year and subject to conditions.
• Trade and Business Licensing: The Private Funds Act provides an exemption from the Trade and Business Licensing Act.
• Transitional relief: The Savings and Transitional Provisions Regulations, 2020 gave existing and newly-formed funds a grace period, requiring compliance with the 2020 Law by 7 August 2020 unless CIMA specified a later date; the 2020 fee regulations also waived the first annual fee for funds registering within six months of commencement.
• VASP scope exclusion: The Virtual Asset (Service Providers) (Amendment) Act, 2026 clarifies that a tokenised private fund's issuance of digital investment tokens in accordance with the Private Funds Act is excluded from 'virtual asset issuance', so it need not be treated separately as virtual asset business under the VASP regime.
• Approved stock exchange: Listing on a CIMA-approved exchange can trigger certain exemptions under the regulatory laws; the Approved Stock Exchanges policy sets out which exchanges qualify.

Sources: Private Funds (Fees) Regulations, 2020 (SL 16 of 2020) · Private Funds (Savings and Transitional Provisions) Regulations, 2020 (SL 5 of 2020) · Private Funds Act (2025 Revision) · Private Funds Regulations (2022 Revision) · Virtual Asset (Service Providers) (Amendment) Act, 2026 (Act 4 of 2026) · Statement of Guidance: Non-Fund Arrangements (November 2020) · Regulatory Policy - Exemption from Audit Requirement for a Private Fund (March 2022) · Regulatory Policy - Exemption from Valuation Requirement for a Private Fund (September 2020) · Regulatory Policy – Approved Stock Exchanges (April 2023) · Regulatory Policy – Exemption from Valuation Requirement for a Private Fund

Enforcement and penalties

Enforcement flows through CIMA's general powers under the Monetary Authority Law (extended to the private funds regime) and the administrative fines regime, as well as the specific enforcement provisions of the Private Funds Act.

• Administrative fines: The Monetary Authority (Administrative Fines) Regulations (2025 Revision) let CIMA fine breaches of 'prescribed provisions' (which include private funds provisions) classified as minor, serious or very serious, attracting fixed, fixed-continuing or discretionary fines, following a prescribed breach-notice process.
• Procedural rights: A party receiving a breach notice may rectify and notify CIMA within 30 days to potentially avoid a fixed fine, must reply within the stated reply period, may seek internal review of a fixed fine by CIMA's Management Committee, and may apply to the Grand Court for leave to appeal a discretionary fine. An unpaid fine is a debt to the Crown and accrues interest.
• Supervisory and enforcement powers: The Private Funds Act gives CIMA broad supervisory and enforcement powers, including special measures, information requests, and powers to act against unregistered funds; it is also an offence to misrepresent an entity as a registered private fund. For tokenised funds CIMA may request additional information, monitor compliance, and inspect the underlying technology and token transactions.
• Rule breaches: Breach of CIMA Rules (for example on NAV calculation, marketing material and segregation of assets) is addressed through CIMA's Enforcement Manual and its powers under the Private Funds Act and Monetary Authority Law.
• Late cessation notice: The cancellation procedures note that failure to notify CIMA of cessation within the timeframe prescribed in the related Rule can result in administrative fines.

The instruments indexed here do not set out specific private-funds fine amounts; the amounts and classifications are governed by the Administrative Fines Regulations by reference to the prescribed provisions, which are not reproduced in these summaries.

Sources: Monetary Authority (Administrative Fines) Regulations (2025 Revision) · Private Funds (Amendment) Act, 2026 (Act 6 of 2026) · Private Funds Act (2025 Revision) · Regulatory Procedure - Cancellation of Certificates of Registration for Registered Private Funds · Rule - Calculation of Net Asset Values - Registered Private Funds (July 2020) · Rule - Segregation of Assets - Registered Private Funds · Rule - Contents of Marketing Material - Registered Private Funds