The principal aim of the updates is to streamline the process for deregistering mutual funds and private funds.
Previously, regulated funds had the option to file their deregistration application in a ‘two-stage’ process and gained certain annual fee reductions following the submission of the stage one core deregistration requirements and the placement of the funds by CIMA into either “License under Termination” (LUT) or “License under Liquidation” (LUL) status prior to the final distribution to investors and the completion of the final audit. Under the updated Rules, the LUT and LUL status options have been eliminated and regulated funds must file all applicable deregistration requirements at one time. Regulated funds will remain fully registered with CIMA and liable to pay full annual fees until the complete deregistration application has been submitted following the final distribution to investors and the completion of the final audit. The content of the deregistration requirements has not changed substantially under the updated Rules.
Regulated funds must be in good standing with CIMA when they file their deregistration application under the Rules. Good standing requires that funds must have paid all prescribed fees and submitted all required audited financial statements and must not have any outstanding queries or regulatory filings with CIMA.
Consistent with the previous rules, regulated funds must still notify CIMA when the funds intend to cease carrying on business or have ceased carrying on business as a regulated fund pursuant to the Mutual Funds Act (as amended) or the Private Funds Act (as amended) within 21 days from the date the funds cease to carry on business. CIMA may levy administrative fines to any regulated funds that fail to notify CIMA that they have ceased to carry on business or will cease to carry on business within the 21-day timeframe prescribed in the Rules. Accordingly, please reach out to Appleby at the early stages whenever you are considering a restructure or whether to cease carrying on business as a regulated fund.
The updated Rules further codify CIMA’s previous policy that, unless a regulated fund qualifies for an audit waiver, it must file its final audited statements from the date of the last financial year-end (for which audited statements have been filed) to either (a) the date of final distributions to investors, or (b) the date of the final net asset value calculation, with the subsequent events note confirming that final distributions have been made to investors. In circumstances where a third-party liquidator has been appointed and final audited statements are being produced, the final audited statements must cover, at a minimum, the period from the date of the last financial year-end (for which audited statements have been filed) to the date of the appointment of the third-party liquidator. CIMA may require additional information to be provided to cancel a regulated fund’s certificate of registration.
If you are intending to close your fund by 31 December 2022 or if you have a question in regard to this Client Alert, please reach out to your usual Appleby representative.