Comparison of regulatory regimes for closed-ended private investment funds: Cayman Islands and British Virgin Islands

Abstract

Purpose To introduce, compare and contrast the new regulatory regimes for closed-ended funds recently enacted in the Cayman Islands and the British Virgin Islands (BVI). Design/methodology/approach Explores similarities and differences between the two regimes, as well as practical implications for fund managers, with respect to (1) the regulatory frameworks governing the funds; (2) the definitions of the types of funds covered by the regulations; (3) registration requirements and associated timing; (4) operating requirements, including responsibilities for portfolio management, valuation and safekeeping of fund property; the number of directors; audits; valuation procedures; safekeeping of fund assets; cash monitoring; identification of securities; offering documents, term sheets and marketing materials; and representation in the respective jurisdictions; and (5) additional requirements, including numbers and qualifications of investors. Findings The new legislation has been enacted in order to respond to certain European Union and other international recommendations and has the effect of aligning the regulatory regimes applicable to such funds structured in Cayman and BVI to the regulatory regimes applicable to such funds in other jurisdictions. Originality/Value Expert guidance from lawyers with extensive experience in fund management, fund structuring and Cayman Islands and British Virgin Islands laws and regulations.