In 2020, the Cayman Islands Monetary Authority (CIMA) introduced the Private Funds Act now revised to the Private Funds Act (2021 Revision) (PFA) and there are 13,219 private funds registered with the CIMA as of 31 March 2021.
The PFA requires private funds to file audited accounts and have appropriate procedures for the valuation of assets and proper custodial and cash-monitoring processes.
The CIMA recently extended the deadline for the filing of the first audited accounts for private funds to 30 September 2021.
As the first anniversary of the deadline to register private funds and the deadline for filing the first audited accounts approaches, directors and investment managers may be unable to justify the continuance of the fund in light of the increased costs associated with the above processes.
Placing the company into voluntary liquidation may render the company exempt from any audit requirement.
The CIMA and the Regulatory Policy “Exemption from Audit Requirement for a Private Fund” states that “Where a fund is being voluntarily liquidated and a third-party liquidator has been appointed under terms that require a review of the period since the last financial year end for which an audit has been filed, the fund must submit a third party liquidator’s report covering the period under such terms, which should include….”. This means a liquidators report may replace the audit requirement.
The process of obtaining the audit waiver for a private fund as part of the voluntary liquidation mirrors the mutual funds' process. At Kroll, we have extensive experience in securing such waivers.
Should you wish to discuss this, or any other matter associated with the Private Funds regime, please contact us.
