If you are a manager of a Cayman corporate fund and you are thinking about terminating the Cayman fund by the upcoming year-end, there are some important things for you to consider:
• Realising the Cayman fund’s assets and converting the same into cash
• Processing redemptions
• Giving notice to terminate existing service contracts
• Appointing a voluntary liquidator to the Cayman fund
Of the items in this list, the last is vital.
Once the voluntary liquidator is appointed, time will be of the essence to meet statutory deadlines. That is, once a deadline is missed, it is unlikely that the Cayman regulator or other authority will pardon the late action.
Some of the cut-off dates that the manager and the voluntary liquidator should think about are as follows:
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These submission closing dates are important.
Where the expensive option of requesting a special, “extraordinary” publication date is not available, missing a deadline will mean:
1. Delaying the publication of statutory notices for the benefit of the Cayman fund’s creditors (creditors are customarily asked to submit their claims within a certain period following the Cayman Islands Gazette publication date).
2. Postponement of the date of the final general meeting of the Cayman fund (similar to the creditors’ notice, the final general meeting may be held following the expiration of the statutory notice period or such other longer period stated in the Cayman Islands Gazette publication referencing the Cayman fund).
Ultimately, the holding of the final general meeting is the moment that the manager and voluntary liquidator are waiting for. At this meeting, the liquidator’s report is expected to be approved, the liquidator confirms that all of the affairs of the Cayman fund have been wound up and the liquidator gets ready to complete any remaining filings with the Cayman Islands Monetary Authority (where applicable) to conclude the Cayman fund’s deregistration as a mutual fund.
Once the final meeting formalities are done, a last set of documents is presented to the Cayman Islands registrar of companies, following which, the Cayman fund will be deemed dissolved after the passing of a statutory period.
Avoiding January 2015 Fees
A secret aim of the manager of a Cayman fund in making these things happen in an efficient and competent way is to avoid 2015 fees which may be applicable to the Cayman fund in certain circumstances. A good voluntary liquidator will know how to manoeuvre these situations, keeping the Cayman fund away from what could be prohibitive fees.
The liquidator will also know that the Cayman registrar of companies often (and kindly) offers an incentive to Cayman funds which are in the process of termination. This is where the registrar may agree (but there is no guarantee that it will do so in any particular year) that, if the Cayman fund fails to have its final general meeting by the December calendar year end, the Cayman fund may not be forced to pay annual fees to the registrar of companies that would normally become due in January 2015, provided that the Cayman fund holds its final general meeting on or before the end of January 2015 and completes all of its final filings on time with the registrar with respect to that meeting date.
Time is Running Out
Now that you know what to consider and what pitfalls to avoid, you need to ensure that your current liquidator is on track. Alternatively, you may have to go with your second thoughts and appoint a voluntary liquidator who can appreciate that time is of the essence. Otherwise, the Cayman fund will not arrive without incident at its final termination goal.
About the Author:
Alric Lindsay is a corporate lawyer and an independent fund director approved by the Cayman Islands Monetary Authority. Alric is also licensed as a professional director under The Directors’ Registration and Licensing Law. Alric also acts as voluntary liquidator to Cayman Islands entities. Alric can be contacted at