FOCUS
is located in the heart of George Town, Grand Cayman.
The Cayman Islands have become the leading offshore
jurisdiction in the funds industry and are currently
home to an estimated 80 percent of the world's hedge
funds. At the end of 2005, over 7,000 mutual funds
were domiciled in the Cayman Islands.
Recognizing
the world-wide trend and phenomenal growth in mutual
funds and other investment funds, the Cayman Islands
enacted its Mutual Funds Law in 1993 (now the Mutual
Funds Law 2003 Revision). The primary objective of
the law was to provide legislation for flexible but
effective regulation to a fast-growing sector with
widespread implications for the Cayman Islands' financial
industry, while positioning it as one of the world's
leading international financial centers.
In drafting
the legislation, the fact that Cayman tended to attract
institutional and sophisticated, high-net-worth investors
was taken into consideration, as was the existing
good practice and high standard of self-regulation.
The law, therefore, aims to ensure that only those
with sound reputation and appropriate expertise are
permitted to establish and administer mutual funds
in the Cayman
Islands.
The mutual fund industry has experienced
phenomenal growth since it was regulated. The reasons
the Cayman Islands are viewed as a jurisdiction of
choice include:
-
An expeditious formation process and a user friendly
registration system with the Cayman Islands Monetary
Authority (CIMA)
-
Market access and the availability of professional
services
-
The flexibility afforded by the range of
structures used to operate mutual funds
-
Positive investor perception and the excellent
local infrastructure
-
Listing availability on the Cayman Islands Stock
ExchangeGeographic location, time zone and the Cayman
Islands' legal, regulatory and tax environment
Specific advantages of the Cayman
Islands as a jurisdiction for mutual funds are:
-
The Cayman Islands is well known for its close
working relationship between government and the
private sector. This has created a business environment
that is efficient and free of timeconsuming bureaucracy
-
The Cayman Islands Mutual Funds Law is designed
to be a user-friendly regulatory framework for fund
managers. Regulatory and licensing procedures are
straightforward
-
Cayman has a well-developed and sophisticated
legal and court system with ultimate appeal to the
Privy Council in London. The legal framework permits
flexibility and enables Cayman funds to participate
in sophisticated investment techniques. These may
include leveraging the portfolio to a substantial
extent making loans of securities on an unlimited
basis, investing in all types of securities and
security derivatives, and investing without restriction
in any currency or instruments
-
Cayman is a "no-tax" jurisdiction; it has no history
of taxation whatsoever and the country has no mechanism
for future taxation
