Cayman
Islands Table of Statutes
This is a non-exhaustive list of the main
Cayman Islands statutes affecting offshore
and non-resident business. The statutes
are listed in alphabetical order - click
on the statute for a fuller description
of the statute or the legal regime it
forms part of.
Banks
& Trust Companies Law 1995, amended 2003
Companies Law 1995
Companies Law (2007 Revision)
Confidential Relationships (Preservation)
Law 1995
Exempted
Limited Partnerships Law 1991
Fraudulent Dispositions
Law 1989
Immigration
Law 1992
Insurance Law 1979
(as amended)
Local Companies
(Control) Law 1995
Maritime Authority
Law 2005
Mutual Fund Law 1993
as amended
Partnership
Law 1995
Perpetuities Amendment
Law 1997
Perpetuities Law 1995
Proceeds of Criminal Conduct (Amendment)
(Foreign Offences) Law 1999
Proceeds
of Criminal Conduct Law 2008
Registration
of Merchant Ships Law 1991
Securities Investment
Business Law (2001) as amended
Segregated
Portfolio Company Law
1998
Special Trust (Alternative
Regime) Law 1997
Stamp Duty Law
1995
Stock Exchange
Company Law 1996
Trade
and Business Licensing Law (1995 Revision)
Trust (Foreign Element)
Law 1997
Trust Law (1996 Revision)
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In
early 2006, the Cayman Law Reform Commission
set itself the ambitious task of transforming
many aspects of the jurisdiction's legal
framework, in a bid to bring it up to
date with legal practice in other financial
centres.
“Cayman
is among the world’s leading financial
centres and it is therefore paramount
that our laws and legal system should
endeavour to remain contemporary,"
the Attorney General, Hon. Sam Bulgin,
QC, told the Commissioners when they met
with him.
"Political
and social stability, and a significant
and modern communications and financial
infrastructure mean nothing unless we
have the necessary and relevant laws available
to members of our legal profession so
they can advise their clients properly,”
he added.
Mr
Bulgin noted that the "pioneering"
new committee would be responsible for
developing new areas in the law, codifying
unwritten laws and examining the underlying
causes of dissatisfaction with any law
or its administration.
The
Commission intended over the subsequent
two or more years to examine 15 areas
of the law, outlined by the Senior Legislative
Counsel Cheryl Ann Neblett who heads the
Commission’s office. These include:
evidence; corruption; contempt of court;
proceeds of crime; alternative sentencing;
juvenile justice; regulation of legal
practitioners; legal aid; consumer protection;
maintenance, affiliation and matrimonial
causes; landlord and tenant legislation;
and children’s legislation.
Thus
far, a number of individuals and organisations
have been consulted as part of the legal
overhaul process, including attorneys-at-law,
rental agencies and the Chamber of Commerce.
Ms Neblett has also urged members of the
public to offer their input into the process.
The
Commission has already commenced work
on the reform of a number of matters,
which include the Landlord and Tenant
legislation, the Legal Practitioners Bill
and the Legal Aid Bill.
In
mid-2006 the Jersey Financial Services
Commission added the Cayman Islands to
its list of countries and territories
considered to have an equivalent anti-money
laundering framework.
The
move was seen by the Cayman Islands Monetary
Authority as being of significant benefit
to Cayman-based financial institutions
and their clients which do business with
financial institutions in Jersey.
The
recognition allows Jersey's customer identification
procedures to be satisfied if the client
has met Cayman's customer identification
requirements. This potentially saves time
and resources that would otherwise have
to be spent processing and supplying duplicate
know-your-customer documentation to Jersey.
Jersey's
anti-money laundering legislation and
guidance provide in certain circumstances
for a financial services business to place
reliance on another institution to conduct
customer identification procedures, where
the institution is subject to obligations
equivalent to those in Jersey, and where
an overseas regulatory authority supervises
the institution.
The
listing of Cayman came after months of
discussion between the Cayman Islands
Monetary Authority (CIMA) and its Jersey
counterpart, as well as CIMA's lobbying
at international forums such as the Overseas
Group of Banking Supervisors for reciprocal
recognition of equivalent anti-money laundering/counter
terrorist financing (AML/CFT) frameworks
among jurisdictions.
"We
are pleased that Jersey has now added
us to its list. The issue of equivalency
listings relating to AML/CFT regimes is
something CIMA has been concerned about
for some time," commented CIMA Managing
Director Cindy Scotland.
"We
continue to engage in bilateral negotiations
with regulators in countries where Cayman
is not currently listed as having equivalent
AML/CFT regimes," she added.
Mrs
Scotland further explained that collaboration
between CIMA and the Jersey Financial
Services Commission was being further
extended through a memorandum of understanding
on information exchange and cooperation.
Cayman
Islands Trust Law
Cayman Islands trust law is based on the
Trust Law 1967, itself very similar to
the English Trustee Act 1925. However,
there has been considerable subsequent
legislation which has distanced Cayman
trust law from its English origins. In
particular, Cayman has chosen, unlike
England, not to adopt the Hague Convention,
perferring to maintain the flexibility
to set its own path. The most important
recent pieces of Cayman trust legislation
are as follows:
- the
Perpetuities Law 1985 introduced a
perpetuity period of 150 years, plus
a 'wait and see' rule whereby a disposition
or power will only fail when it tries
to bite outside the perpetuity period.
- the
Trust (Foreign Element) Law 1987 strengthened
the validity of Cayman trust law,
established importation and exportation
of trusts, provided for the non-enforcement
of foreign judgements, and specifically
excluded forced heirship provisions
(all of this making Cayman trusts
more attractive in civil law jurisdictions
in particular);
- the
Fraudulent Dispositions Law 1989 replaced
the Statute of Elizabeth, and strengthened
the defences of a Cayman trust against
creditors, as long as the trust is
not bankrupt in Cayman. There is a
6-year limitation period on creditors'
claims.
- the
Special Trust (Alternative Regime)
Law 1997 introduced purpose trusts.
- the
Trust Law 1996 introduced exemption
of trusts, whereby in exchange for
registration with the Registrar of
Trusts they can obtain a 50-year undertaking
from the Governor to the Trustees
that the trust will not be subject
to any future Cayman taxation. Trusts
do not otherwise require to be registered
in Cayman.
The
Banks and Trust Companies Law 1995 introduced
licensing for companies providing trust
services; the Law was amended in 2001
and 2003 and revised in 2007.
Trust licenses are now as follows:
- Trust
licences, covering the conduct of
trust business within and outside
of the Islands but subject to such
conditions as may be imposed by the
Authority
- Restricted
Trust licences, covering the conduct
of trust business with the restriction
that the licensee shall not undertake
trust business for persons other than
those listed in any undertaking accompanying
the application for the licence;
- Nominee
(Trust) licences, covering trust business
under a Trust licence to a licensee
which is a wholly-owned subsidiary
of another licensee and where the
sole purpose of that subsidiary is
to act as its nominee.
Trust
Licenses require a minimum net worth of
USD400,000; Restricted Trust Licences
and Nominee (Trust) Licences require a
minimum net worth of only USD20,000. The
parent of a Nominee Trust company must
provide a guarantee of not less than USD200,000.
Licensees do not need to be Cayman companies;
but foreign licensees will probably have
to provide a head office guarantee. All
applications include considerable amounts
of administrative and financial information.
Companies
holding any type of trust licence must
have a place of business in the Islands,
approved by CIMA, which will be its principal
office in the Islands; and must have two
individuals or a body corporate, approved
by CIMA, resident or incorporated in the
Islands, as its agent. Any trust licensee
incorporated in the Cayman Islands must
submit annual audited accounts to CIMA.
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Cayman
Islands Banking Law
Cayman Islands banks need to be licensed
under the Banks and Trust Companies Law
1995, as amended in 2001 and 2003. Banking
licenses are Class A, Class B restricted
or Class B unrestricted:
-
Class A licenses permit full domestic
and offshore banking;
- Unrestricted
Class B Trust Licenses permit full
offshore banking with an unlimited
number of customers and require a
minimum net worth of USD400,000;
- Restricted
Class B licenses require a minimum
net worth of only USD20,000, but a
list must be provided to the Inspector
of Financial Services of the clients
with which the bank intends to do
business, and the list cannot change
without further notification to the
Inspector. Licensees do not need to
be Cayman companies; but foreign licensees
will probably have to provide a head
office guarantee. All applications
include considerable amounts of administrative
and financial information.
Continuing
supervision is exercised by the Monetary
Authority. Quarterly returns and audited
annual statements must be lodged. Share
transfers, and changes to directors and
officers must be authorised. Banks with
unrestricted licenses are required to
adhere to the Basle Convention Rules.
Banking
confidentiality is well-established in
Cayman through the common law, and is
also enshrined both in the Banks and Trust
Companies Law 1995 and in the Confidential
Relationships (Preservation) Law 1995.
Banking staff and government officials
face civil and criminal sanctions if information
is disclosed without authorisation. A
number of laws permit the enforcement
of foreign judgements or the disclosure
of information in response to a court
order, but normally in the context of
criminal activity and drug use or dealing.
Despite
mutual assistance treaties, the Cayman
Islands will not normally co-operate with
fiscal investigations, and does not normally
respond to requests for assistance on
fiscal matters.
The
Proceeds of Criminal Conduct Law, originally
passed in 1999, was strengthened in 2000,
and requires depositors to provide banks
with due diligence documentation - a passport
or driving license, proof of their physical
address, and an outline of their banking
activities. Reaction to the new requirements
was mixed: in 2003, as a deadline for
conformity with the new requirements drew
nearer, Tim Godber, President of the Cayman
Islands Bankers Association admitted that
he was bemused by objections, saying:
'I really don't understand why people
think the request is onerous. Account
holders who might have obtained their
funds illegally would be putting us at
risk, so I think it only fair that we
are allowed (to) ascertain for certain
the identity of our account holders, and
other important information about how
they will use the account.' But local
attorney-at law, Michael Alberga argued
that: 'Privacy is the key to democracy,
it's what separates democracy from other
forms of government. Why should people
who have lived and banked here all their
lives have to provide more information
about themselves?'
A
Bill to Repeal and Replace the Proceeds
of Criminal Conduct Law (2007 Revision);
to Consolidate the Law relating to the
Confiscation of the Proceeds of Crime
and the Law Relating to the Mutual Legal
Assistance in Criminal Matters; and for
Incidental and Connected Purposes was
tabled in the Legislative Assembly in
2008. This has brought about new Proceeds
of Criminal Conduct Law (PCCL), 2008,
which was approved in June 2008.
The
208-page law expands the scope of legislation
originally enacted in 1996 and revised
several times since. It is based largely
on the UK Proceeds of Crime Act 2002 and
largely incorporates amendments made to
the UK's Serious Organised Crimes and
Police Act 2005.
It
is one of Cayman's two main statutory
means of dealing with confiscation of
the proceeds of crime, the other being
the Misuse of Drugs Law and the related
Misuse of Drugs (Drug Trafficking Offences)
(Designated Countries) Order 1991.
Attorney
General, Samuel Bulgin explained that
in addition to consolidating the different
money laundering provisions currently
found in different pieces of legislation,
the revamped PCCL contains, for the first
time, a civil forfeiture component. This
means that the Attorney General is able
to bring civil proceedings in a court
to confiscate property that is obtained
through unlawful conduct (civil recovery).
This is an entirely new provision and
makes it less onerous to obtain a confiscation
order as there is no need to first obtain
a criminal conviction.
According
to the Attorney General the harmonised
money laundering legislation "is
robust and accords with the international
standards and best practice". He
declared that is generally be equivalent
to the money laundering measures of the
countries listed in the recently published
European Union "White List".
The
new law is one of the several recommendations
made by the International Monetary Fund
(IMF) in its report on the Cayman Islands
released in 2005. The new law also contains
provisions for the Summary Court, in addition
to the Grand Court, to make confiscation
orders and to criminalise certain lifestyles.
Provisions
governing the powers, duties and functions
of the Financial Reporting Authority and
the Anti Money Laundering Steering Group
remain unchanged.
However,
the new legislation strengthens confiscation
and restraint orders. Certain confiscation
order procedures are now mandatory; the
Grand Court must proceed with them when
asked by the Attorney General.
A
restraint order has the effect of freezing
property that may be liable to confiscation
following a trial and the making of a
confiscation order, the Attorney General
said. Currently, a restraint or charging
order may be made only by the Grand Court
under certain circumstances. The new law
abolishes as unnecessary the power of
the Grand Court to make a charging order.
Also,
the point at which a restraint order may
be made is to be brought forward to any
time after the start of an investigation.
Previously it was possible only where
charges were anticipated within a period
of 21 days.
Another
notable feature is the broadening of compensation
provisions under certain conditions. It
has also become possible for the Attorney
General to request an asset freeze abroad
before any restraint order is made in
the Islands, should conditions for making
such an order be satisfied. Additionally,
the definition of criminal conduct has
been expanded, with no restriction on
the type of criminal offence to be dealt
with under the new law. "The Grand
Court would only need to consider whether
the defendant has benefited from any conduct
which is, or would be, contrary to the
criminal law of the Islands," the
Attorney General explained.
He
noted the new law also expanded the scope
for international cooperation to a larger
number of countries beyond those currently
designated. Additionally, the law addresses,
"in a comprehensive way, all the
weaknesses identified by the IMF and the
FATF (Financial Action Task Force) regional
offshoot - the Caribbean FATF - in their
evaluation report," he added.
The
bill underwent extensive public consultation.
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Cayman Islands Insurance
Law
Cayman Islands insurance companies are
regulated by the Cayman Islands Monetary
Authority (CIMA) under the Insurance Law
1979 as amended in 2004. The following
types of license are available:
-
A Class A Insurers
Licence permits a local or an external
insurer to carry on insurance business
generally in or from within the Islands;
an external insurer having its principal
or registered office in a place outside
the Islands where the legislation
for the regulation and supervision
of insurers is acceptable to the Authority
may be licensed as an approved external
insurer under Class A.
- An
Unrestricted Class B Insurers
License permits an exempted insurer
to carry on insurance business other
than domestic business from within
the Islands.
- A
Restricted Class B Insurers
Licence permits an exempted insurer
only to accept insurance business
other than domestic business from
its member or members or such other
persons as may be specifically approved
by the Authority.
-
Insurance Agents Licence;
-
Insurance Brokers Licence;
-
Insurance Sub-Agents Licence;
-
Insurance Managers Licence;
and
-
Principal Representative (Insurance)s
Licence.
No insurers licence other than a
Restricted Class B Licence
will be granted to any person whose net
worth- (a) in the case of an insurer effecting
general business but not long term business,
is less than one hundred thousand dollars;
(b) in the case of an insurer effecting
long term business but not general business,
is less than two hundred thousand dollars;
and (c) in the case of an insurer effecting
long term business and general business,
is less than three hundred thousand dollars.
The
licensing process begins once a company
name has been approved; an application
incorporating a business plan and details
of beneficial ownership is made to CIMA.
Capital may be provided either by shares
or loans.
Insurers
must maintain full and proper records
at a fully-staffed office in Cayman; alternatively,
a local manager can be appointed to administer
the business. The manager must also be
licensed under the insurance law. It is
usually necessary to appoint Cayman Islands
auditors; audited annual accounts must
be submitted to the Superintendent within
six months of the end of the accounting
period.
There
are many other detailed regulations; and
CIMA has substantial powers to inspect
and to apply sanctions when necessary.
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Cayman Islands Mutual
Fund Law
Cayman Islands mutual funds are regulated
under the Mutual Fund Law 1996 (revised
in 2007), and as regards listing
they fall under the Stock Exchange Company
Law 1996. The Mutual Fund Law requires
mutual funds to be licensed, or to be
administered by a licensed mutual funds
administrator. There are the following
exemptions from the requirement to license:
-
A fund listed on a recognised stock
exchange;
- A
fund with a minimum purchasable aggregate
equity interest of CI$40,000;
- A
fund with not more than 15 investors
holding voting equity interests;
- A
closed-end fund
A
mutual fund administrator must be licensed;
he must have a registered office on Cayman,
must be competent, and must have a net
worth of at least CI$400,000.
Mutual
funds must be audited annually, and the
financial statements must be filed with
the Monetary Authority within six months
of the end of an accounting period.
There
are no restrictions on the investment
policy of funds in Cayman, whether listed
or not.
For
listing on the Stock Exchange, certain
other originating jurisdictions are 'approved':
Bermuda, Canada, all EU member states,
Guernsey, Hong Kong, Isle of Man, Japan,
Jersey, Malaysia, Singapore, Switzerland,
and the USA. For funds which have primary
listings on recognised stock exchanges,
a secondary listing may be acquired in
Cayman quite simply; the services of a
listing agent are not mandatory.
Funds
to be listed must appoint a custodian
who is a separate legal entity from the
fund, its operators or its administrators,
but may be an associate of any of them.
The fund must have an independent auditor.
There are some shareholder disclosure
requirements; and information is required
about the fund's main broker and the regulatory
regime applying, in particular for segregation
of fund assets. In order to be listed,
a fund must have at least 25% of listed
securities in public hands, or restrict
trading to professional investors. There
are detailed rules specifying the contents
of the Listing Document.
Listing
is possible both for open- and closed-end
funds; funds may take various corporate
forms, including: investment company,
unit trust and partnership. In Cayman
Island terms, the entities that may be
used include the exempted company, the
limited duration exempted company, the
ordinary non-resident company, the exempted
trust, and the exempted limited partnership.
See Forms of
Company for details of these entities.
NB: The above is an abbreviated summary
of some aspects of the Cayman Islands
Stock Exchange listing regime, given for
general information only.
In
September 2002, Cayman introduced a new
law requiring licensing for any one conducting
securities investment business except
where an exemption is available.
The
Securities Investment Business Law, 2001
(the "Law") was passed in March 2002 and
came into force in 2003. The aim of the
Law is to regulate the business of securities
investment in the Cayman Islands and provide
an appropriate structure for the regulation
of securities brokers, including market
makers, arrangers, investment advisors
and investment managers. The fundamental
objective of the law is to define activity
that requires a licence and then to ensure
that such activity is undertaken by fit
and proper persons in accordance with
accepted supervisory standards of conduct
for securities investment business. The
Cayman Islands Monetary Authority is directly
responsible for the licensing, supervision
and enforcement of such licences.
The
definition of securities investment business
("SIB") includes managing the securities
of another person in circumstances involving
the exercise of a discretion and advising
a person on securities if:
- the
advice is given to that person in
their capacity as an investor or as
an agent for an investor; and
-
the advice is on the merits of dealing
in the security or of exercising a
right conferred by a security to deal
in securities.
The
Law applies to any person, company, foreign
company or partnership that is resident
in, incorporated in or registered in the
Cayman Islands or which has established
a place of business in the Cayman Islands
and is carrying on SIB. For example, an
investment adviser or investment manager
that is a Cayman Islands entity or has
a physical presence in the Cayman Islands
and is conducting SIB from the Cayman
Islands, will be covered by the Law. Such
an entity will require to be licenced
under the Law unless its activities are
covered by one of the exemptions contained
within the Law.
The
exemptions include:
- a
group company that carries on SIB
exclusively for one or more companies
within the same group; and
-
an entity that carries on SIB exclusively
for a "sophisticated person" or a
"high net worth person". A sophisticated
person includes a person:
-
regulated by the Monetary Authority
(which would include a Cayman
Islands regulated mutual fund);
-
regulated by a recognised overseas
regulatory authority;
-
any of whose securities are listed
on a recognised securities exchange;
or
-
who by virtue of knowledge and
experience in financial and business
matters is to be reasonably regarded
as capable of evaluating the merits
of a proposed transaction; and
participates in a transaction
with a value or in monetary amounts
of at least USD1,000,000 in the
case of each single transaction.
-
a high net worth person means
an individual whose net worth
is at least USD1,000,000 or has
total assets of not less than
USD5,000,000.
Entities falling within these exemptions
will be required to file an annual declaration
with the Cayman Islands Monetary Authority
confirming that they fall within such
an exemption and pay an annual fee of
USD1,250. The declaration must be signed
by a director or partner of the entity
and electronic filing of the form will
be accepted on the basis that original
forms will be forwarded within one month.
When submitting the form, the Monetary
Authority must be advised who will be
responsible for dealing with queries and
the payment of annual fees. If none of
the exemptions apply the SIB provider
must apply to the Cayman Islands Monetary
Authority for a licence otherwise it commits
an offence and is liable on summary conviction
to a fine and/or imprisonment.
On
August 14 2002, the Securities Investment
Business Law, 2002 (Commencement) Order
2002 was approved by the Cayman Islands
Executive Council. In practical terms
this means that the application of the
excluded person/registrant regime of the
Law came into force from August 14th 2002.
It obliges anyone carrying on SIB to examine
their status under the Law and consider
whether they should now apply for one
of the exemptions under the Law, or potentially
be subject to its licensing requirements.
Two
practical examples of the application
of this regime are where:
- a
restricted mutual funds administrator
(which can provide services for up
to 10 related funds) is carrying on
SIB exclusively for a sophisticated
person (which includes a regulated
mutual fund). In these circumstances,
that entity will be able to register
under the Law's excluded person/registrant
regime and will not be required to
be licenced under the Mutual Funds
Law.
-
A promoter of a Cayman Islands fund
wishes to establish a Cayman based
investment manager. Previously this
would have fallen under the definition
of mutual fund administration under
the Mutual Funds Law and required
such an entity to be licensed under
that law. With the proposed exemptions,
provided that the manager only manages
funds which are: in the same group
of companies as the manager; or have
a minimum subscription for an investor
in the fund of USD100,000, then an
exemption can be applied for.
In
November, 2003, CIMA introduced new mutual
fund regulations in order to make funds
domiciled in the jurisdiction more attractive
to Japanese fund distributors. Legal experts
explained that the changes were deemed
necessary, as although the Japan Securities
Dealer's Association had not objected
to the distribution of Cayman-registered
funds, the guidelines for the selection
of foreign unit trusts were vague with
regard to the required standards for foreign
regulatory regimes, meaning that some
Japanese fund distributors had opted not
to take the risk.
Although
this was by no means a universal position,
demonstrated by the fact that currently
around 20 funds domiciled in the Cayman
Islands are sold to the Japanese public,
CIMA decided to introduce new regulations
to soothe the fears of more wary distributors.
From November 19, fund prospectuses for
Japanese markets must reveal the rights
and restrictions attached to securities,
such as the terms of their issue and redemption,
and the method of calculating redemption
prices. Funds domiciled in the Cayman
Islands and selling to the Japanese public
must also be audited in accordance with
the standards set out in the new rules.
However,
CIMA included a clause in the new regulations
exempting existing Cayman funds registered
in Japan from the obligation to adopt
the more stringent rules if the fund manager
does not see the need.
In
2008, funds licensed in the Cayman Islands
became subject to three new rules issued
by the Cayman Islands Monetary Authority
(CIMA) to further enhance regulation of
the retail-funds sector.
The
rules, which were recently approved by
the government, became effective on April
28, 2008, with their publication in the
Cayman Islands Gazette. They are: the
Rule on the Contents of Offering Documents,
which outlines the information to be included
in offering documents; the Rule on the
Calculation of Asset Values, which requires
funds to specify their policy for calculating
the funds asset values, and the Rule on
the Segregation of Assets for Licensed
Funds.
The
rules are intended to ensure that prospective
retail investors are able to make informed
investment decisions, and enhance the
overall protection of investors and their
assets in the licensed funds. The rules
apply to all funds licensed pursuant to
s.4(1)(a) of the Mutual Funds Law (2007
Revision) - except those subject to the
Retail Mutual Funds (Japan) Regulations
2003 (as amended).
The
new rules formalise what has been common
practice among Cayman-licensed funds.
In codifying these practices, Cayman is
now officially in line with the Objectives
and Principles of Securities Regulation,
the standard issued by the International
Organization of Securities Commissions
(IOSCO). The new measures also fill regulatory
gaps, with respect to the IOSCO principles,
that the International Monetary Fund (IMF)
identified in its assessment of the Cayman
financial sector in 2003.
CIMA's
Managing Director, Cindy Scotland, noted
that the Authority has a consistent focus
on complying with appropriate international
regulatory standards and practices - and
suggested that this is the latest example.
"These
rules meet the relevant IOSCO principles
with respect to retail funds, while being
adaptable enough to provide for competitive
flexibility. The rules also leave the
successful regulatory framework for non-public
funds unchanged," explained Mrs Scotland.
The
Rule on the Contents of Offering Documents
stipulates that a fund's offering document
describe the fund's equity interests in
all material respects. Additionally, the
document must contain such other information
as is necessary to enable a prospective
investor to make an informed decision
as to whether or not to subscribe to or
purchase the fund's equity interest. It
also strengthens the Mutual Funds Law
requirements by setting out the minimum
information that must be included in an
offering document for a licensed fund.
Under
the Rule on the Calculation of Asset Values,
licensees must now also establish, implement
and maintain a net asset value (NAV) calculation
policy, and must outline the scope of
such a policy. This rule mandates that
the policy be "fair, reliable, of
high quality and verifiable".
Finally,
the Rule on the Segregation of Assets
for Licensed Funds calls for a fund's
portfolio (i.e., all financial assets
and liabilities) to be segregated and
accounted for separately from any assets
of any service provider.
Also,
licensed funds must ensure that service
providers do not use the portfolio to
finance their own or any other operations
in any way. Another requirement is that
funds ensure, by contract, that service
providers who hold or manage the portfolio
are regulated by CIMA or by a recognised
overseas regulatory authority or another
regulator approved by CIMA.
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