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We have previously discussed the Cayman Islands –
So the Cayman Islands was flagged by the European Union’s Economic and Financial Affairs Council (ECOFIN) as a “non-cooperative jurisdiction” for tax purposes. This was regarded by the international investment community as a “blacklisting” of the Cayman Islands.
This blacklisting was “a technical result of the delay in the enactment of [certain Cayman Islands] laws. On October 6, 2020, ECOFIN removed the Cayman Islands from its “blacklist” of non-cooperative jurisdictions in tax matters. ECOFIN has graded Cayman as a cooperative jurisdiction with respect to tax good governance, endorsing the assessment of the EU’s Code of Conduct Group on Business Taxation that Cayman has addressed the outstanding concerns previously raised by the EU. Thus the Cayman Islands can safely remain one of the most preferred fund formation jurisdictions of the Israeli private investment funds industry.
Challenges In Establishing New private investment Funds During 2020
Additional legislation
However, over the course of the last few months we, and other funds formation professionals, have encountered a new, albeit temporary, challenge when forming investment funds in the Cayman Islands which slowed down fund formations by a month or two. In February 2020, the Cayman Islands Government enacted legislation requiring closed ended funds (such as VC Funds & Private Equity Funds) to register with the Cayman Islands Monetary Authority (CIMA). The legislation is a result of certain EU and other international recommendations designed to align the Cayman Islands investment fund regulatory regime with other jurisdictions. The deadline for such registration was early August 2020. CIMA was (and still is) overwhelmed by the sheer number of funds requesting to be registered (according to our Cayman Islands sources, the approximate number of such funds is over 18,000(!)).
Covid – 19 Consequences On Employees Productivity
The coronavirus epidemic which continues to force CIMA employees to work from home and the result was (and still is) unprecedent delays in the registration of new funds (including hedge funds). The good news however is that it is expected that once CIMA overcomes this deluge of fund registration application, Cayman fund formation schedules will return to normal, i.e., highly efficient and swift, levels.
