Are there more highly regulated fund types in the Cayman Islands?
Yes. Most funds are set up as Section 4(3) funds. This is generally regarded as an appropriate vehicle for funds offered to sophisticated investors. However, there are alternatives. Licensed mutual funds may be established where the authority is satisfied as to the reputation of the promoter, the expertise of the administrator, the directors being fit and proper persons and the fact that the business of the fund will be operated in a proper way. Regulated funds may be established where a licensed mutual fund administrator provides the fund’s principal office in the Cayman Islands. These alternative types of fund are not subject to the minimum interest per investor requirement of US$100,000. Will the EU Alternative Investment Fund Managers Directive affect the Cayman Islands funds adversely? While it is impossible to ascertain the effects of the directive until the final version has been passed, it is now regarded as unlikely that the Cayman Islands funds will be greatly affected. Cayma
