Dissolving a Cayman-domiciled fund before 31 December 2024

22 August 2024 - Are you thinking about dissolving your Cayman-domiciled fund this year? If so, you can save time and money by commencing the voluntary liquidation process before the end of August 2024.

Funds registered with the Cayman Islands Monetary Authority (CIMA), in accordance with the Mutual Funds Act (2021 Revision) or the Private Funds Act (2021 Revision), should consider beginning the formal liquidation process before 31 August 2024. Adhering to this timeframe should ensure that Cayman-domiciled entities can be dissolved before 31 December 2024, which will help to avoid additional regulatory costs for 2025.

The timely filing of documents with CIMA has a number of advantages, such as:

• Saving on annual license fees due to the Cayman Islands Registrar and CIMA;
• No further compliance obligations with respect to Foreign Account Tax Compliance Act (FATCA)/Common Reporting Standards (CRS) or Economic Substance filing to the Cayman Department for International Tax Cooperation (DITC); and
• Potential savings on preparation of further audited financial statements.

It is important to note that unless a fund qualifies for an audit waiver, it is still required to prepare final audited accounts either (a) from the date of the last financial year-end to the date of final distributions to investors; or (b) from the date of the last financial year-end to the date of the final net asset value calculation, with the subsequent events note confirming that final distributions have been made to investors.

A voluntary liquidation can be seamless with the right preparation and guidance, but certain deadlines should be met in order to avoid potential additional costs.

As experts in entity life cycle management, Citco Corporate Solutions supports corporate and fund clients in need of liquidation services, providing them with pragmatic and simple guidance to successfully complete these legal processes. Our team of experienced professionals can conduct voluntary liquidations whilst ensuring that the winding up of an entity will be handled quickly, equitably, transparently and in accordance with Cayman law.