Administrative Fines

2. Supervisory and enforcement powers of CIMA in respect of Private Funds

2.1.  CIMA has broad discretionary supervisory and enforcements powers in respect of Private Funds.

2.2.  If CIMA knows or has reasonable grounds to believe that a Private Fund:

2.2.1. is unable or appears likely to become unable to meet its obligations as they fall due;

2.2.2. is carrying on business fraudulently or otherwise in a manner detrimental to the public interest, to the interest of its clients or to the interest of its creditors;

2.2.3. is carrying on or attempting to carry on business or is winding up its business voluntarily in a manner that is prejudicial to its investors or creditors;

2.2.4. has contravened any provision of PFA or Anti-Money Laundering Regulations (2020 Revision) as amended;

2.2.5. has failed to comply with a condition of its registration; or

2.2.6. has not conducted the direction and management of its business in a fit and proper manner or has Directors, senior officers, managers or persons who have acquired ownership or control who are not “fit and proper persons”,

CIMA may take certain actions, including:

(a) cancel the registration of the Private Fund;
(b) impose conditions or further conditions on the Private Fund and to amend or revoke those conditions;
(c) require the substitution of any promoter or operator of the Private Fund;
(d) appoint a person to advise the Private Fund on the proper conduct of its affairs;
(e) appoint a person to assume control of the affairs of the Private Fund;
(f) apply to the Cayman Islands’ Grand Court for an order to take such other action as it considers necessary to protect the interests of investors in, and creditors of, the Private Fund; and
(g) if a magistrate is satisfied on an application made by CIMA or a police officer of the rank of Inspector or above that there are reasonable grounds for suspecting that an offence under the PFA has been, is being or is about to be committed in certain premises, the magistrate may issue a warrant authorizing CIMA or a police officer and such other persons as may reasonably be needed to enter and search the premises.

This publication is not intended to be a substitute for specific legal advice or a legal opinion. For specific advice on Funds in Cayman Islands, please contact your usual Loeb Smith attorney or any of the following:

E: gary.smith@loebsmith.com
E: robert.farrell@loebsmith.com
E: elizabeth.kenny@loebsmith.com
E: vivian.huang@loebsmith.com
E: yun.sheng@loebsmith.com
E: faye.huang@loebsmith.com
E: wendy.au@loebsmith.com

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