How to Prepare for End-Year Cayman Islands Liquidations

Year-end preparations for financial firms are well underway, with the associated deadlines coming into view.  Cayman Islands-based entities that are approaching or have reached the end of their lifecycle should consider including a voluntary liquidation as part of this end-of-year administration. 

To avoid incurring any unnecessary government registration fees, companies in the Cayman Islands that are considering a voluntary liquidation should bring on an appointed liquidator. This contact will need either to hold the company's final general meeting or submit the final dissolution notice for an exempted limited partnership on or before 31 January 2024.  

In light of this deadline, please contact a liquidations professional no later than 1 November 2023 for advice on and to begin any on-boarding and pre-appointment requirements. 

What does a fund need to do to complete the Cayman Islands liquidations process?

Funds seeking to deregister from CIMA will be required to complete a final audit in most instances.  Typically, in the context of a mutual fund, the final audit will cover the period up to the date of (i) the appointment of a third-party liquidator or (ii) the full payment of final redemptions to investors.  Funds will need to allow for this, both in terms of the time required to prepare and submit the audited financials, as well as the associated costs.  Failure to comply with filing requirements may bring about sanctions from CIMA such as an administrative fine of up to US$6,000.

What should Cayman Islands funds know about the recent changes to the deregistration rules?

Last year, CIMA promulgated new deregistration rules for Cayman Islands open-ended funds that fall under the purview of the Mutual Funds Act (Revised), as well as those registered under the Private Funds Act (Revised).  These new regulations affect both the deregistration and liquidations timelines, as well as eliminate the ability to categorise a fund with CIMA as License under Termination ("LUT") or License under Liquidation ("LUL") status. 

For funds, the main result of this regulatory change is that a fund's final audit must be completed before a fund can file deregistration documents with CIMA.  A fund can be granted an audit waiver from CIMA if need be.  However, the fund needs to announce its plans to deregister to CIMA within 21 days of making that determination and/or appointing a designated liquidator. With the proper documentation, the deregistration process should proceed smoothly.

How the Maples Group can assist with Cayman Islands liquidations

The Maples Group is home to the largest voluntary liquidations team in the Cayman Islands, comprising dedicated individuals with extensive experience in the dissolution of various corporate, structured finance and investment fund vehicles.  We have developed best practice procedures that meet all local statutory requirements.  For a straightforward voluntary liquidation of a Cayman Islands company, we can generally complete the formal statutory process within four to five weeks, noting that the effective date of the certificate of dissolution would be three months after the final meeting.

For further information on the team and our liquidation services, please view our Overview of Services or click here to get in touch with our Cayman Liquidations team.