Cayman Fund Wind-Down Checklist: Final Dealing Day to Dissolution

This Cayman fund wind-down checklist takes a solvent investment fund from the last dealing day through CIMA deregistration and voluntary liquidation to dissolution and the final records handover. It is organised as fifteen phases, with the responsible party and the dependency for each, and assumes a fund closing in an orderly way.

Work through it in order: the sequence is not arbitrary, and several steps cannot be started until an earlier one has completed. For the regulatory and corporate processes behind the checklist, see our guide to Cayman fund liquidation and CIMA deregistration.

Key takeaways

• The critical path is almost always the final audit. Everything else can be compressed; that cannot.
• CIMA must be notified within 21 days of the fund ceasing, or intending to cease, to carry on business. Appointing a liquidator is deemed cessation.
• The fund must be in good standing before it can apply to deregister: all fees paid, all audited financial statements and Fund Annual Returns filed, no outstanding queries. Any audit waiver must be approved before the application is submitted, not with it.
• Deregister with CIMA, then complete the liquidation. The fund stays Active and fully fee bearing until CIMA's approval letter issues.
• The fund cannot be deactivated from the DITC portal until it has been formally dissolved, so someone must retain portal access after the service providers stand down.

Phase 1: Board decision and wind-down plan

Who: Directors, with the investment manager.

• Board resolution recording the decision to cease business as a fund, the cessation date, and approval of the wind-down plan.
• Fix the target completion date and work backwards. If the objective is to avoid the next calendar year's CIMA and Registry fees, the process needs to be under way well before the fourth quarter.
• Identify the wind-down reserve: professional fees, government and regulatory fees, Gazette publication charges, audit fees, bank charges, liquidator's remuneration, and a prudent contingency.
• Confirm that the directors are able and willing to sign a declaration of solvency if a voluntary liquidation is intended.
• Identify who will act as voluntary liquidator, and whether independence from the fund's operators and current service providers is needed for the intended CIMA route.

Dependency: Nothing. This starts everything.

Phase 2: Investor communication

Who: Directors, with the investment manager and administrator.

• Notify investors in accordance with the constitutional and offering documents.
• State the final dealing day, the intended treatment of redemptions, the expected distribution timetable and any retention.
• Where there are side pockets, illiquid positions or a holdback, explain how they will be dealt with.
• Keep a record of what was sent, to whom and when. It will be relevant to the affidavit evidence later.

Dependency: Phase 1.

Phase 3: Suspend subscriptions and dealing

Who: Directors, administrator.

• Neither the Mutual Funds Act (As Revised) nor the Private Funds Act (As Revised) contains a statutory power to suspend. Suspension, the final dealing day and the NAV calculation are governed entirely by the articles, limited partnership agreement or trust deed and the offering document.
• Effect the suspension strictly within the constitutional machinery, and minute the basis for it.
• Instruct the administrator to accept no further subscriptions and to process the final redemption cycle.

Dependency: Phase 1. Getting this wrong is not recoverable later, because CIMA requires an affidavit that the fund operated in accordance with its constitutional and offering documents including the computation of net asset value.

Phase 4: Close the portfolio

Who: Investment manager.

• Realise positions in an orderly way.
• Address illiquid positions, side pockets and any in-specie distribution mechanics under the constitutional documents.
• Note that realising assets in order to redeem investors does not postpone the cessation date. CIMA's definition of ceasing to carry on business expressly excludes the disposal of assets for the purpose of redeeming investors.
• Obtain written confirmation from the manager that all positions are realised and no assets remain other than cash.

Dependency: Phase 3.

Phase 5: Settle counterparties and close accounts

Who: Investment manager, directors, administrator.

• Close prime brokerage, custody, execution and trading accounts, and obtain closure statements.
• Settle or terminate derivatives, ISDAs, financing arrangements and any collateral positions.
• Terminate or run off remaining service contracts, but not the ones you still need. Service providers and AML officers must be retained until CIMA approves the deregistration.
• Retain at least one operating bank account with functioning payment and signatory arrangements. Closing the bank account early is one of the most common causes of delay in the final weeks.

Dependency: Phase 4.

Phase 6: Final NAV

Who: Administrator, with the directors.

• Strike the final net asset value in accordance with the constitutional and offering documents and the valuation policy.
• Decide early which of the two audit patterns you are following, because it determines the audit engagement scope: audited accounts to the date of final distributions to investors, or audited accounts to the date of the final NAV calculation, with a subsequent events note confirming final distributions were made.
• Where a third party liquidator is appointed, the final audited accounts must cover, at a minimum, the period to the date of that appointment.

Dependency: Phases 4 and 5.

Phase 7: Investor distributions

Who: Administrator, directors, liquidator once appointed.

• Reconcile the register of members and the full subscription, redemption and distribution history.
• Complete outstanding customer due diligence on remaining holders. Payments cannot be made where doing so would breach the Anti-Money Laundering Regulations (As Revised), the Proceeds of Crime Act (As Revised) or applicable sanctions measures.
• Make the final distributions, retaining the wind-down reserve.
• Resolve every holdback and retention. CIMA's standard is that there are no residual cash or assets "owed or potentially owed" to investors. An open retention is inconsistent with the affidavit CIMA requires.
• Where a holder cannot be traced or cannot be cleared, do not simply distribute their entitlement to the others. Segregate it and deal with it through the statutory trust in the liquidation.

Dependency: Phase 6.

Phase 8: Final audit and Fund Annual Return

Who: Auditors, administrator, directors.

• Commission the final audit early; see Cayman fund audit requirements. This is the long pole in the entire wind-down.
• The final audit period can be extended to a maximum of 18 months from the last audited financial year end. There is no application fee for the extension; the request goes to CIMA by email with a signed cover letter from a current core service provider on record.
• File the final audited financial statements and the Fund Annual Return. CIMA is explicit that a fund with an outstanding audit or an outstanding annual return cannot apply to deregister.
• Where an audit waiver is to be sought, it must be applied for separately and approved before the deregistration application is submitted. CIMA states that exemptions are considered under exceptional circumstances only, and the deregistration application may be returned if the waiver has not been approved at the time of filing.

Dependency: Phases 6 and 7. This phase gates the CIMA application.

Phase 9: CIMA notification and deregistration

Who: Directors, corporate services provider, liquidator where appointed.

• Notify CIMA within 21 days of the cessation date. Where a liquidator has been appointed, cessation is deemed to be the date of appointment. Failure is a minor breach carrying a fixed administrative fine.
• Confirm good standing: all prescribed fees paid, all audited financial statements submitted, no outstanding queries or filings.
• Assemble the core pack: the original certificate of registration or licence (or an affidavit of loss, which is disapplied where the certificate was issued electronically); the prescribed surrender fee; and a certified copy of the resolution confirming the cessation date.
• Add the reason-specific evidence. For cessation of business, a notarised operator affidavit. For a voluntary liquidation with a third party liquidator, the Registrar-stamped notice of winding up and consent to act, plus, where an audit exemption was granted, a liquidator's affidavit.
• Affidavits must be notarised, and any amendment after notarisation invalidates them.
• Mutual funds file through CIMA's REEFS portal. Private funds and their sub-funds apply by email to CIMA's terminations mailbox.
• Master funds: a master fund will not be deregistered while it has regulated feeder funds that remain active but are not in good standing. Sequence the feeder first.
• Understand that the fund remains Active and fully fee bearing on CIMA's records until the deregistration approval letter issues. There is no interim status and no fee concession.

Dependency: Phase 8.

Phase 10: Declaration of solvency

Who: Directors.

• Signed by every person who was a director at the commencement of the winding up.
• Confirms that a full enquiry into the company's affairs has been made and that the company will be able to pay its debts in full, together with interest at the prescribed rate, within a period not exceeding 12 months from commencement.
• Filed with the Registrar within 28 days of commencement.
• If it is not signed within 28 days, the liquidator must apply to the Grand Court for the liquidation to continue under its supervision, and that application must be made within seven days of the period expiring.
• Knowingly making the declaration without reasonable grounds is an offence.

Dependency: Phase 11 commencement.

Phase 11: Commence the voluntary liquidation

Who: Members, directors, liquidator.

• Members' special resolution that the fund be wound up voluntarily. The winding up is deemed to commence when the resolution is passed.
• Members' resolution appointing the voluntary liquidator and fixing remuneration.
• Liquidator's consent to act. The appointment takes effect on filing that consent with the Registrar, at which point all directors' powers cease except so far as sanctioned.
• From commencement, business ceases except so far as beneficial for the winding up, and any share transfer without the liquidator's sanction is void. Instruct the administrator accordingly and obtain written acknowledgement.
• Note: a voluntary liquidator of a solvent Cayman company does not need to be a licensed insolvency practitioner. Any person, including a director or officer, may be appointed. A professional is usually preferred, and independence matters where the CIMA route depends on it.

Dependency: Phase 9 for sequencing, though the resolutions themselves may be passed earlier where the deregistration is being pursued on the voluntary liquidation basis.

Phase 12: Registrar filings and Gazette

Who: Liquidator, corporate services provider.

All of the following must be completed within 28 days of commencement:

• Notice of the voluntary winding up: filed with the Registrar.
• Liquidator's consent to act: filed with the Registrar.
• Declaration of solvency: filed with the Registrar.
• Notice of the winding up: served on CIMA, where the fund carries on regulated business.
• Notice of the winding up: published in the Gazette.

Note that it is publication, not submission, that must occur within the 28 days. Work back from the Gazette's publication calendar, and be prepared to use an extraordinary Gazette if the ordinary calendar will not deliver in time. Failure to make these filings is an offence carrying a fine.

There is no statutory creditor claims period in a solvent voluntary liquidation. Allowing a period of around 21 days after Gazette publication before final distributions is customary market practice adopted as a matter of prudence, and should be agreed with the liquidator.

Dependency: Phase 11.

Phase 13: Final general meeting

Who: Liquidator, members.

• Liquidator prepares the final report and account of the winding up, showing how it has been conducted and how the fund's property has been disposed of.
• Notice of the final general meeting specifying its time, place and object, sent to each contributory at least 21 days before the meeting, accompanied by the report and accounts, and published in the Gazette.
• At the meeting, the members resolve to approve the final report and accounts, approve the liquidator's remuneration including for work still to be done, resolve on the retention and destruction of the books and records, and resolve on the treatment of any dividend cheques uncleared for more than six months.
• Where the liquidation runs beyond a year, an annual general meeting must be held within three months of each anniversary, with a report and account laid before it.

Dependency: Phase 12, and CIMA approval from Phase 9 before the final return is filed.

Phase 14: Final return and dissolution

Who: Liquidator, Registrar.

• The final return is filed with the Registrar no later than seven days after the final general meeting.
• The Registrar registers the return within three days of receiving it.
• The company is deemed dissolved on the expiry of three months from the registration of that return. Note that the three months runs from registration by the Registrar, not from the meeting and not from the filing date.
• The Court may defer the dissolution date on application, but no such application can be made once the company is deemed dissolved. If a problem is going to be spotted, it has to be spotted inside that three-month window.

Dependency: Phase 13, and CIMA approval.

Phase 15: Records, tax deregistration and the tail

Who: Liquidator, corporate services provider, administrator, tax advisers.

• DITC deactivation. The fund cannot be deactivated from the portal until it has been formally dissolved. All CRS and FATCA returns, filing declarations and compliance forms must be filed first, with an end date of 31 December of the year of termination, and the evidence of dissolution uploaded as a single consolidated file. Someone must retain portal access and the principal point of contact role until this is complete.
• Economic substance. An investment fund is not a relevant entity and files no economic substance return, but the annual notification must be filed for so long as the entity exists, and it gates the annual return.
• Unclaimed distributions. Any unclaimed dividends or undistributed assets in the possession or control of the liquidator are held on trust for the persons entitled. The former liquidator must advertise for claims and take reasonable steps to locate claimants. At the end of one year after dissolution, anything still held must be transferred to the Minister charged with responsibility for Finance. It is not paid to CIMA.
• AML officers. Retain the anti-money laundering compliance officer, money laundering reporting officer and deputy until CIMA has approved the deregistration. Until the last investor payment is made, resigning them is not defensible, because the payment itself is relevant financial business.
• Records retention. Five years is the general floor under the Anti-Money Laundering Regulations and the Companies Act (As Revised). Six years after the final CRS return is the longest fixed period, and it survives dissolution. Name in the wind-down plan the person who will hold the records.
• Bank account closure. Only once every fee, disbursement, retention and statutory trust transfer has been dealt with.

Frequently asked questions

What is the single most common cause of delay?

The final audit. It has to be commissioned, completed, signed and filed before the deregistration pack can be assembled, and it cannot be compressed by paying more attention to the other steps.

Can we run the CIMA deregistration and the liquidation in parallel?

Partly. The resolutions and Registrar filings can be under way while CIMA processes the application, but the final return should not be filed until CIMA has approved the deregistration. Regulatory clearance precedes the corporate endpoint.

When exactly does the 21-day CIMA notification clock start?

From the date the fund ceases, or intends to cease, to carry on business, normally the date stated in the operators' resolution. Where a liquidator is appointed, cessation is deemed to be the date of appointment, whether or not that was intended.

Do we still pay CIMA fees while winding down?

Yes. Since 17 August 2022 there is no licence under termination or licence under liquidation status and no annual fee concession. The fund remains Active until the approval letter issues, and the annual fee falls due on 15 January and is not pro-rated.

What if an investor cannot be traced or cleared?

Segregate the entitlement, do not distribute it to the other holders, and deal with it through the statutory trust that arises in a liquidation. This mechanism does not exist in a strike-off, which is one of several reasons a fund should be liquidated rather than struck off.

Can we just let the fund be struck off?

Not sensibly. Strike-off leaves the liability of directors, officers and members intact and exposes the entity to restoration for up to ten years, and there is no statutory route for residual investor entitlements. See voluntary liquidation versus strike-off.

How long does the whole thing take?

Roughly four to six months from board decision to dissolution for a clean fund, and longer where a stub-period audit is required. The liquidation itself runs about six weeks to three months to the final return, plus three months to deemed dissolution.

Where Bell Rock fits

Bell Rock Group Financial Services Limited is licensed by the Cayman Islands Monetary Authority as a Company Manager under the Companies Management Act (As Revised), Licence No. 633916. Through its Cayman liquidation and entity closure service, Bell Rock coordinates and administers the corporate and regulatory steps of a fund wind-down: the corporate approvals, the declaration of solvency process, the CIMA notification and deregistration pack, the Registrar filings and Gazette publication, the final general meeting, the final return and dissolution, and the records and portal tail afterwards.

Bell Rock can identify a suitable individual for appointment by the members as voluntary liquidator; that individual acts in a personal capacity, and Bell Rock does not assume the liquidator's duties. Bell Rock works alongside the fund's administrator and auditors rather than replacing them, and CIMA determines every deregistration application.

Related reading

• CIMA governance guidance for regulated fund boards
• Cayman investment funds: structures and regulation
• Restoring a struck-off Cayman company
• CIMA Deregistration of a Fund: Process, Timing and Records
• Register of Members for Cayman Companies: Contents, Updates and Certified Copies
• CIMA Registration and Ongoing Obligations for Cayman Funds

Bell Rock coordinates fund closures through its Cayman liquidation and entity closure service.