Summary of Fund Regulation and Legislation
Definition of Mutual Fund
The definition of a mutual fund, as established in the Mutual Funds Law (2009 Revision), can be summarised as follows:
A mutual fund is any company, trust or partnership either incorporated or established in the Cayman Islands, or if outside the Cayman Islands, managed from the Cayman Islands, which issues equity interest redeemable or repurchaseable at the option of the investor, the purpose of which is the pooling of investors' funds with the aim of spreading investment risk and enabling investors to receive profits or gains from investments.
Note that funds commonly referred to as hedge funds fall within the definition of a mutual fund and are thus covered by the Mutual Funds Law.
Regulation of Funds & Fund Administrators
The Mutual Funds Law (2009 Revision) (MFL) gives the Cayman Islands Monetary Authority responsibility for regulating certain categories of funds operating in and from the Cayman Islands. The law also provides for the regulation of mutual fund administrators by CIMA.
Not all mutual funds are regulated. The MFL specifies the categories of mutual fund that are exempt from regulation. Funds that meet the criteria set out in section 4(4) of the MFL are exempt. All other mutual funds are regulated.
The ongoing supervision of funds and fund administrators falls under the remit of CIMA's Investments and Securities Division.