private fund – Nelsons

2024: What to Expect from the Cayman Beneficial Ownership Regime

The Cayman Islands will be implementing enhancements to the beneficial ownership regime currently in place during the course of 2024. The Beneficial Ownership Transparency Act 2023 (Act) was passed by the Cayman Islands Parliament on 23 November 2023. The Act is not yet effective, and we will keep you updated as to the implementation process over the course of 2024. The key aim of the Act is to pull together the various rules relating to beneficial ownership currently split between several laws and regulations for specific types of entities, into a single piece of unified legislation. At present, the beneficial ownership provisions for companies, limited liability partnerships (LLPs) and limited liability companies (LLCs) are set out respectively in the Companies Act 2023 (Revised) (Companies Act), the Limited Liability Partnership Act (2023 Revision) and the Limited Liability Companies Act (2023 Revision). The Act will consolidate, and therefore simplify the beneficial ownership regime to ensure a consistent approach to the treatment of in-scope entities. The current beneficial ownership regime applies to companies incorporated under the Companies Act, LLCs and LLPs. The Act will extend the regime to foundation companies, limited partnerships and exempted limited partnerships. The expansion of the regime to these entities will be in stages and will give the in-scope entities time to assess their obligations and, where required, to adhere with their obligations to establish a register of beneficial ownership. The Act amends the definition of “beneficial owner” so that it is more aligned with the definition under the Cayman Islands Anti-Money Laundering Regulations (the AML Regulations), save that the relevant percentage for determining “control” will remain at 25% or more (not 10% or more, which is the threshold under the current AML Regulations). [...]

Corporate Governance Update: Cayman Islands Regulated Funds

April 2024 A year since the introduction of the updated regulatory measures by CIMA on corporate governance for regulated entities. How are the rules and guidance being implemented by funds? The Cayman Islands Monetary Authority (CIMA) released updated regulatory measures in April 2023 in relation to the rule on corporate governance for regulated entities (Rule) and associated statement of guidance for mutual funds and private funds (Guidance). The Rule has been effective since 14 October 2023. The Rule introduced numerous changes to the previous corporate governance obligations for regulated entities and extends to private funds, which was not previously included. The Rule creates binding requirements on all entities regulated by CIMA. A breach of a Rule could lead to the issuance of a fine or enforcement action taken by CIMA. What is the purpose of the Rule and the Guidance? Pursuant to the Rule, the governing body (i.e. the board of directors, general partner or managing members depending on the entity structure) of a regulated entity (Governing Body) must establish, implement, and maintain a corporate governance framework which provides for sound management oversight and protects the legitimate interests of relevant stakeholders. The Guidance is expected to assist the Governing Body of mutual funds and private funds with interpreting the Rule for implementation in a fund context. How are funds implementing the Rule and Guidance? Funds are implementing a corporate governance manual by pulling together all their operational policies and procedures into one clear and simplified manual that cover the requirements outlined in the paragraph headed ‘What are the required Governance measures?’ below. Even though the minimum requirement for funds is for the Governing Body to meet on an annual basis, we have been assisting [...]