The Government of the Cayman Islands has issued a statement confirming its continuing implementation of measures to ensure that the Cayman Islands Monetary Authority ("CIMA") will have in place the required intergovernmental agreements on time for the 22 July 2013 implementation of the Alternative Investment Fund Managers Directive (the "Directive) in Europe.
Why does AIFMD affect Cayman Funds?
The Directive aims to provide for an internal market for Alternative Investment Fund Managers ("AIFMs") within the EU. Unless a complete or partial exemption is available however, the reach of the Directive extends not only to EU funds, but also, to a lesser extent, to Non- EU funds managed by Non-EU Managers (a "Non-EU AIFM"), marketing to EU investors. Non-EU AIFMs will be required to comply with certain provisions of the Directive by 22 July 2013 where they are marketing Non- EU (including Cayman Islands) funds within the EU.
What needs to be in place by July 2013?
As defined in the Directive, the activity of "marketing" is any direct or indirect offering or placement at the initiative of the AIFM or on behalf of the AIFM, of units or shares in a fund it manages to or with investors domiciled in the EU. The definition of marketing does not include reverse solicitation and any reverse solicitation will generally not be considered to be marketing under the Directive.
Non-EU AIFMs marketing Cayman funds into the EU on a private placement basis will, subject to the individual private placement rules of each Member State, be permitted to continue to market such Cayman funds to Professional Investors1 on a private placement basis in that Member State under the Member State's own private placement rules after 22 July 2013 only where the following pre-conditions are in place:
The country in which the AIF is established is not listed as a non-cooperative country and territory by the OECD's Financial Action Task Force on anti-money laundering and terrorist financing - the Cayman Islands is not on this list. The Non-EU AIFM must comply with the transparency requirements ("Transparency Provisions") of the AIFMD (please see below). There must be in place a cooperation arrangement for the purpose of systemic risk oversight between:- The regulators of the EU member states in which the Cayman Fund is marketed; Those member states and the home jurisdiction of the Non-EU AIFM; Those member states and the Cayman Islands. On 15th March 2013 the Cayman...