2022 clock is ticking for dissolving a Cayman fund or corporate entity

5 August 2022 - Investment managers looking to dissolve or wind down a Cayman-domiciled entity before the 31st of December 2022 can save time and money if they act before the end of August to begin the liquidation process.

A voluntary liquidation for a Cayman-based entity can be seamless with the right preparation and guidance, but certain deadlines should be met in order to avoid potential additional costs.

For those managers wishing to wind up a fund before the end of the year, acting before 31st August 2022 could be a prudent move to prevent having to pay additional filing fees or having to meet other regulatory hurdles.

This applies to all funds registered with the Cayman Islands Monetary Authority (‘CIMA’), in accordance with the Mutual Funds Act (2021 Revision) or the Private Funds Act (2021 Revision), and adhering to this timeframe should ensure the funds can be dissolved before the final day of the year.

Timely filing of documents with CIMA is crucial and it should also be noted that Funds are still required to complete the final audit for transactions up to the date that the third-party liquidator is appointed, or to the date that the final redemptions have been paid in full.

The advantages of good time management when planning a liquidation include:

  • Saving on annual license fees due to the Cayman Islands Registrar and CIMA;
  • No further compliance obligations with respect to Foreign Account Tax Compliance Act (‘FATCA’)/Common Reporting Standards (‘CRS’) or Economic Substance filing to the Cayman Department for International Tax Cooperation (‘DITC’); and
  • Potential savings on preparation of further audited financial statements.

As experts in entity life cycle management, Citco Governance Services supports corporate and fund clients in need of liquidation services providing them with pragmatic and simple guidance to successfully complete these legal processes.

To discuss your options and requirements, please contact cayliquidations@citco.com

By Katerina Mickova, Trust Account Manager, Fund Secretarial/Board Support Services, Citco Trustees (Cayman) Limited