Cayman Investment Management Company Formation 

 

CIMA Registration | Corporate Services | CIMA Registered Directors | Economic Substance | Compliance 

We work with many clients looking to set up a Cayman Islands investment management company or investment advisor. Setting up a Cayman investment management company has many key benefits such as:

  • Complimenting your fund offering

  • Limited liability for your fund management company;

  • Licensed or exempt from full licensing (registered person investment manager);

  • No taxation at your Cayman investment manager;

  • Speed to formation.

What Law Applies to Cayman Investment Managers?

The Securities Investment Business Act (2020 Revision), as amended, (the Act) provides for the licensing and control of 'securities investment business' carried on in, or from, the Cayman Islands. Under the Act, a person shall not carry on or purport to carry on securities investment business without being either registered or licensed under the Act, unless exempt as a non-registrable person.

The Act applies to companies, limited liability companies, foreign companies, partnerships or limited liability partnerships incorporated or registered under the laws of the Cayman Islands through which securities investment business is carried on (whether or not that securities investment business is carried on in the Cayman Islands). It also applies to foreign entities that have established a place of business in the Cayman Islands through which the relevant activity constituting the securities investment business is carried on.

What is securities investment business?

For the purposes of the Act, a person carries on securities investment business if that person is engaged in the course of business in any of the following activities:

  • dealing in securities as an agent or, where the relevant person holds himself out as dealing in securities for other persons, as principal;

  • arranging deals in securities with a view to another person dealing in securities;

  • participating in the arrangements for dealing in securities;

  • discretionary management of securities belonging to another person;

  • 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;

  • managing or marketing an EU Connected Fund; or

  • acting as a depositary for an EU Connected Fund.

    The term 'securities' is widely defined in the Act and includes shares, partnership interests, trust units, debt instruments, warrants, options, futures, contracts for differences and virtual assets.

 

Who will need to register with CIMA as a registered person?

  • companies that carry on securities investment business exclusively for one or more companies within the same group;

  • persons who carry on securities investment business exclusively for:

    • sophisticated persons* or high net worth persons**; and/or

    • companies, partnerships or trusts (whether or not regulated as a mutual fund) of which the shareholders, limited partners or unitholders are sophisticated persons or high net worth persons; and

      and who have a registered office or a place of business in the Cayman Islands for which services are provided by a person licensed to provide such services; and

  • persons who would be required to be licensed under the Act, but who are regulated in relation to securities investment business by a recognised overseas regulatory authority in the country where that business is conducted.

*This term is defined in the Act and includes certain regulated persons and those persons who, due to their knowledge and experience, are regarded as being capable of evaluating proposed transactions and where the minimum single transaction value is US$100,000 or its equivalent in any other currency.

**This terms is defined in the Act and means (a) an individual whose net worth is US$1,000,000 or its equivalent in any other currency or (b) any person with total assets of not less than US$5,000,000 or its equivalent in any other currency.

What is the application process for registration?

In order to register, a completed application must be submitted to CIMA via an online portal, together with the registration fee of CI$5,000 (US$6,098) and any other information requested by CIMA.

Registration is subject to the applicant:

  • being in good standing;

  • having a minimum of two directors;

  • having directors, senior officers and shareholders who are deemed by CIMA to be fit and proper persons; and

  • having directors in good standing that are currently registered or licensed in accordance with the Director Registration and Licensing Act, 2014 (as amended, the DRLA.).

 

Applicants will also be required to provide details of their anti-money laundering (AML) compliance and reporting officers. 

 

Will the economic substance regime apply?

The International Tax Co-operation (Economic Substance) Act (2020 Revision), as amended, came into force on 1 January 2019 and imposes economic substance requirements on companies and limited liability companies in the Cayman Islands. Registered persons under the Act will be required to consider whether they fall within- scope of the Cayman Islands economic substance regime. 

Where to start?

We routinely advise on the formation of investment management companies and investment advisors in the Cayman Islands and manage the entire process such as legal entity formation, CIMA registration as a registered person, provision of CIMA registered directors, economic substance services, compliance and other on-going support services. Feel free to contact us for further information.