Obtaining an investment manager licence in the Cayman Islands is worthwhile for working with stock portfolios, private capital and the assets of institutional clients under the supervision of CIMA — the Monetary Authority. Such a role is called an Investment Manager.
Obtaining an investment manager permit in the Cayman Islands is required where the company takes decisions for a client or a fund. Such a mandate grants the right to choose assets, give instructions to a broker and change the composition of the portfolio without a separate agreement on each transaction.
The arrangement of a Cayman investment manager licence is suitable for managing a stock portfolio, separate investment accounts, family structures and the assets of professional depositors. The islands are chosen because of the connection with the stock industry, the English legal model and the developed network of administrators, auditors, banks, brokers and custodians.
Obtaining an Investment Manager Licence in the Cayman Islands: What the Investment Manager Status Grants
The licensed function is disclosed through the Investment Manager License. This is activity in the management of another person's securities with the right of an independent choice of investment actions.
The obtaining in the Cayman Islands of an investment manager licence allows the company to manage the assets of a client or a fund within the limits of the agreed mandate. The manager chooses which securities to buy, sell, hold or replace. The decisions are taken as a management action under the contract.
An investment manager who has obtained a permit in the Cayman Islands may perform the following functions:
the management of the investment portfolio of a fund;
the choice of securities for purchase, sale or holding;
the implementation of the strategy according to the client's mandate;
interaction with the custodian, the broker, the fund administrator and the auditor;
the preparation of reporting on the portfolio, the risks and the results.
When It Is Necessary to Obtain an Investment Manager Licence in the Cayman Islands
CIMA assesses the actual role in transactions with securities. If a structure declares itself as an Investment Manager, the regulator will check the content of the service.
It is necessary to obtain an investment manager licence in the Cayman Islands if the company:
is registered in the islands or conducts activity through a place of business in the jurisdiction;
manages another person's securities;
receives a fee for investment management;
has the right to take decisions on the portfolio independently;
presents itself to clients as an investment manager.
For an international investment business, an exempted company is often used. However, other structures are also suitable for obtaining an investment manager licence in the Cayman Islands, for example, a limited partnership or an LLC.
The Requirements for Financial Resources
The calculation of the capital for obtaining an asset manager licence in the Cayman Islands is indicated in the table.
Indicator | Amount |
Basic financial resources for an Investment Manager | 100,000 KYD (about 122,000 USD) |
Alternative calculation | One quarter of the relevant annual expenses |
Requirement for the resulting amount | The greater of the two values |
When arranging a Cayman investment manager licence, CIMA takes into account the scale of the business, the expenses, the outsourcing, the counterparties, the complexity of the strategy and the operational risks. With an active model with several funds or a large number of clients, the regulator may expect a stronger financial base.
The capital cannot be reduced or changed in nature without the written consent of CIMA. For the application, confirmation of the net value of the assets, financial statements or management accounts, the origin of the funds of the organisation and the capital of the beneficiary are prepared.
The Requirements for the Management and Personnel
Within the framework of obtaining an investment management licence in the Cayman Islands, the persons who control the business, take decisions and are responsible for compliance with the law are assessed. The managers must pass a fit and proper test — a check of business suitability.
The regulator assesses honesty, reputation, competence, experience and financial reliability. For obtaining a Cayman investment manager permit, knowledge of the securities market, experience of portfolio management, an understanding of risks, work with brokers, funds, auditors and custodians are important.
For each significant person, a CV, information about education, experience, qualifications, regulatory history, participation in other companies and possible conflicts of interest are prepared. CIMA may request additional explanations if the candidate has had sanctions, judicial, disciplinary or reputational risks.
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The Requirements for the Office and Presence in the Cayman Islands
In order to obtain an investment manager licence in the Cayman Islands, a registered office is needed. It is usually provided by a licensed corporate service provider. The actual presence is assessed separately. For an investment manager, it is important to show where the decisions are taken, where the books and records are stored, who controls the operations and how the regulator will obtain access to the documents.
A model without real management, personnel, control and working procedures increases the risk of additional questions. This is especially important if the applicant manages several funds, works with foreign investors or transfers substantial functions to contractors.
How to Obtain an Investment Manager Licence in the Cayman Islands: the Stages of the Registration Process
The process of registering an investment manager licence in the Cayman Islands begins with the legal qualification of the service and includes the following stages:
It is determined whether an Investment Manager License is needed; the clients, the instruments, the contracts, the presence of independent management and the connection with the Cayman Islands are checked.
The legal form for obtaining an investment manager licence in the Cayman Islands is selected — an exempted company, an LLC, a partnership or a foreign legal entity registered in the islands. At this stage, the owners, directors and service providers are approved.
The constituent documents are submitted to the Registrar of Companies. As a result, the certificate of registration, the registers of participants, directors, the address and the corporate resolutions are arranged.
A description is made of the investment services, the target clients, the countries of work, the stock instruments, the brokers, the custodians, the administrator, the auditor, the sources of income, the outsourcing and the control of risks.
The key managers are determined. For them, questionnaires, CVs, recommendations, certificates and information about the business history are prepared.
Documents are developed on AML/CFT/CPF, sanctions, risk management, corporate governance, client money, personal transactions, outsourcing, cybersecurity, complaints, remuneration and business continuity.
The authorised capital is confirmed; financial reports, management accounts, confirmation of the net value of the assets, the origin of the funds and the source of the capital are prepared.
The applicant sends a form of the established sample through REEFS — CIMA's electronic system for the submission of regulatory forms. The documents and confirmation of payment of the application fee are attached to the application.
CIMA studies the application, the business plan, the capital, the personnel, the clients, the jurisdictions, the internal rules, the outsourcing, the insurance, the record-keeping and the storage of records. With an incomplete package, the regulator returns the application without consideration on the merits.
The applicant sends explanations, updated documents, financial calculations, information on the beneficiaries, agreements with service providers and clarifications on the operational model.
CIMA arranges the Cayman investment manager licence, issues it with conditions or refuses. The document indicates the permitted activity. For an Investment Manager this is the management of another person's securities with the right to take decisions independently. After approval, the fee for the first issuance is paid.
Conclusion
Our team supports the process of arranging an investment manager licence in the Cayman Islands from the primary qualification to the obtaining of the permit document. The work begins with the analysis of the service, the clients, the contracts, the stock structure and the functions of the manager. This reduces the risk of additional requests from the regulator, simplifies the review process and helps to substantiate the chosen business model at each stage of the licensing.
Can a non-resident obtain an investment manager licence in the Cayman Islands?
Yes, a foreigner may arrange this permit document. At the same time, CIMA will check the beneficiaries, the source of the funds, the experience of the team, the business reputation and the reality of the business model.
Is it possible to begin management before obtaining an Investment Manager licence in the Cayman Islands?
No, the licensed activity cannot be begun before the arrangement of CIMA's permit. An exception is possible only in cases where the law allows registration instead of a licence or another special regime.
How much time does the licensing take?
The period for obtaining an investment manager licence in the Cayman Islands depends on the structure of the project, the quality of the documents, the check of the beneficiaries and the number of CIMA's questions. An incomplete application is not considered on the merits until all the mandatory documents are submitted and the fee is paid.