Cayman Islands to maintain funds appeal with latest regulatory changes
开曼群岛投资经理和顾问指引
With the enhancement of Cayman Islands’ regulatory framework in the form of the introduction of the International Tax Co-operation (Economic Substance) Law, 2018 and its related Regulations (ES Law) and welcome updates in 2019 and early 2020 to the Securities Investment Business Law (SIBL), the Anti-Money Laundering Regulations (AML Regulations) and the Mutual Funds Law (MFL), the last 12 months have been a busy time for Cayman Islands funds and their managers and advisers. While the dust is still settling on the full implementation of these regulations, there is increasing clarity on what is now required of these entities and the ongoing role they can offer in the Asian fund landscape.
随着《2018年国际税收合作（经济实质）法》及其相关法规（经济实质法）的出台，以及2019年和2020年初《证券投资业务法》（SIBL）、《反洗钱条例》（AML条例）和《共同基金法》（MFL）的更新，开曼群岛的监管机制框架进一步增强，过去12个月对开曼群岛的基金及其经理和顾问来说是一个忙碌的时期。尽管部分细节及这些法规的全面执行未尘埃落定，但对于这些实体的要求以及它们在亚洲基金行业中持续作用越来越清晰。
Use of Cayman Island entities
The Asian fund market is starting to show its intent to provide alternatives to traditional fund structures which cater and appeal more to Asia-based investors. Arguably, the most significant steps taken in recent years have been the introduction of the Variable Capital Company (VCC) in Singapore and the Open-Ended Fund Company (OFC) in Hong Kong SAR. While these may acquire a share of their respective markets, it will likely take a while for their prime use to be established and even then it could well be alongside Cayman Islands funds in the same structure. For the time being, with 10,857 funds regulated by the Cayman Islands Monetary Authority (CIMA), the Cayman Islands certainly remains the domicile of choice for hedge funds globally.
The Cayman Islands was ranked as the Top Specialised Financial Centre by The Banker for nine years running, it is a contracting state of 36 tax information exchange agreements (also the OECD's multilateral agreement which now has over 100 countries as signatories) and it benefits both from a stable economy with flexible investment legislation and an efficient and responsive regulator. Combine these factors with the speed and low costs associated with fund formations (neither of which are matched by the VCC or OFC) and the depth of professional expertise available on the ground in the Cayman Islands and it is easy to see why Asia-based investors still look to Cayman as the gold standard for hedge funds.
A manager or adviser to a Cayman Islands fund does not itself need to be based in the Cayman Islands, nor does any foreign manager or adviser need to be authorised there for so long as it does not establish a presence or carry out business there. There will often, however, be commercial or tax reasons for why the sponsor of the fund will establish an offshore management or advisory entity that forms part of its onshore group. It is typical, especially for Hong Kong-based asset managers, to use a Cayman Islands entity as a discretionary manager for investment fund structures. The overseas manager could choose either to incorporate a new Cayman Islands entity, or it has the option of registering itself as a 'foreign entity' in the Cayman Islands.
SIBL requirements
Most Cayman Islands managers and advisers (and registered foreign entities acting in such capacity) will fall under the SIBL requirements by virtue of carrying out 'securities investment business', which captures (i) dealing in securities; (ii) arranging deals in securities; (iii) managing securities; (iv) advising on deals in securities; and (v) acting as an 'EU Connected Manager'.
Helpfully, SIBL offers a lower regulatory burden for entities that fall within one of the following categories:
- An entity within a group of companies carrying on securities investment business exclusively for one or more companies within the same group.
- An entity with a registered office in the Cayman Islands provided by a licensed service provider, that carries on securities investment business exclusively for one or more of the following classes of persons:
(a) 'Sophisticated persons', being persons: (i) regulated by CIMA or a recognised overseas regulatory authority; (ii) with securities listed on a recognised security exchange; or (iii) who by virtue of knowledge and experience in financial and business matters are capable of evaluating the merits of a proposed transaction, and where the transaction has a monetary value of at least US$100,000.
(b) 'High-net-worth persons', being persons with: (i) a net worth of at least US$1,000,000; or (ii) total assets of at least US$5,000,000.
(c) Companies, partnerships or trusts whose shareholders, limited partners or unit holders are all sophisticated persons and/or high net worth persons.
- An entity regulated in respect of securities investment business by a recognised overseas regulatory authority in the country or territory (other than the Cayman Islands) in which the securities investment business is being conducted.
If the entity falls within one of the above categories it need only register with CIMA as a 'Registered Person' (which has replaced the previous 'Excluded Person' regime). This straightforward process involves filing an application form (accompanied by certain information and declarations from each 10% ultimate beneficial owner) and paying the registration fee of US$6,100. Provided CIMA is satisfied that its shareholders and the operators/senior officers of the entity are 'fit and proper persons' it will then proceed to register and issue a Certificate of Registration to the entity.
As with CIMA-registered funds, Registered Persons must appoint at least two individual directors/managers or one corporate director/manager, each registered with CIMA under the Directors Registration and Licensing Law, 2014.
Consistent with international practice, Registered Persons must also appoint an Anti-Money Laundering Compliance Officer, Money Laundering Reporting Officer and Deputy MLRO, and have suitable policies and procedures in place to combat money laundering, terrorism financing and proliferation financing.
Unlike entities holding a full CIMA licence under SIBL, Registered Persons are (a) not required to submit annual audited financial statements or business plans, (b) not subject to pre-approval of any change of directors, shareholders or beneficial owners, and (c) not subject to certain Conduct of Business and Financial Requirements made under SIBL.
Economic substance requirements
The other key regulatory consideration for Cayman Islands managers and advisers is that of meeting the requirements of the ES Law. In short, 'relevant entities' carrying out 'relevant activities' are required to meet an economic substance test (ES Test) in respect of gross income deriving from that activity.
Helpfully 'investment funds' (including entities through which they invest) are not 'relevant entities' and therefore not subject to an ES Test. Conversely, Registered Persons will likely be a 'relevant entity', but 'fund management business' is the only management limb of SIBL caught within the 'relevant activities'. A Registered Person only acting as an advisor will therefore likely have no ES Test to satisfy.
Those acting as a manager will need to satisfy the corresponding ES Test, which is currently as follows: (i) conducting Core Income Generating Activities relating to the ‘fund management business’ from the Cayman Islands; (ii) be directed and managed in an appropriate manner in the Cayman Islands; and (iii) with regard to the income generated from the ‘fund management business’, have incurred adequate operating expenditure, have an adequate physical presence and an adequate number of full-time employees or other personnel with appropriate qualifications in the Cayman Islands. Carey Olsen can advise on how a specific ES Test may be met. Helpfully there is the ability for managers to outsource the Core Income Generating Activities, which an increasing number of managers are taking advantage of.
Conclusion
At the start of 2019 there were 2,926 'Excluded Persons' under SIBL, and they had until 15 January 2020 either to re-register as a Registered Person or restructure in such a way that that entity was no longer carrying out securities investment business. At the same time they needed to consider how they were going to comply with the ES Law. We are now seeing an increasing number of successful Registered Person registrations and the process will no doubt become even smoother with the initial rush to meet the deadline now subsiding. With an enhanced regulatory framework in place but still a relatively cost-effective and sensible approach to registration and on-going regulatory oversight, we expect Cayman Islands managers and advisers to continue to play an important role in Asian fund structures.
An original version of the article was first published by HFMWeek, March 2020.
© Carey Olsen 2020.
开曼群岛实体的使用
亚洲基金市场正逐步显示出其提供传统基金结构以外的其他选择，以迎合和吸引更多亚洲投资者。近年来，新加坡推出的可变资本公司（VCC）和香港推出的开放式基金公司（OFC）可以说是最重要的举措。尽管这些公司可能在各自的市场中占有一定的份额，但确立其主要用途可能还需要一段时日，即便如此，他们也很可能与开曼群岛基金运用在同一结构中。目前，开曼群岛金融管理局（CIMA）监管的基金数量为10857只基金，开曼群岛无疑仍是全球对冲基金的首选。 开曼群岛连续九年被《The Banker》杂志评为“最佳专业金融中心”，是36个税收信息交换协议的签约国（也是OECD的多边协议签署国，现已有100多个国家签署）。同时，开曼群岛受益于稳定的经济环境、灵活的投资法规以及高效且响应迅速的监管机构。除了这些因素，结合基金组建效率高、成本低（VCC或OFC都无法与之相提并论）以及开曼专业人士的服务能力，很容易理解为什么亚洲投资者仍然将开曼视为对冲基金的黄金标准。
开曼群岛基金的管理人或顾问本身不需要设在开曼群岛，任何外国管理人或顾问只要不在开曼没有设立机构或开展业务，也无需在开曼获得许可。不过，出于商业或税收的原因，基金发起人通常会建立一个离岸管理实体，作为其在岸集团的一部分。一般而言，尤其是对于香港的资产管理公司，通常会使用开曼群岛实体作为投资基金结构的全权管理人。海外管理人可以选择成立新的开曼群岛实体，也可以选择在开曼群岛注册为“外国实体”。
SIBL要求
开曼群岛大多数的管理人和顾问（以及注册外国实体）因开展“证券投资业务”而应当符合SIBL的要求，该业务包括（i）证券交易； （ii）安排证券交易； （iii）管理证券； （iv）就证券交易提供咨询；以及（v）担任“欧盟关联管理人”。
为提供有效帮助，SIBL为符合以下条件的实体降低了监管要求：
1. 专门为集团内部其他公司提供证券投资交易服务的公司。
2. 在开曼群岛设有注册办事处的实体，专门为下列一类或多类人士 从事证券投资业务：
a. . “专业人士”: (i) 受 CIMA或境外监管机构监管的人士 （ii）其证券在 CIMA 认可的证券交易所上市的人士；或者 (iii) 凭借在金融和商业事务方面的知识和经验有能力评估交易的优劣，而且交易金额至少为10万美元的人士；
b. . 高净值人士：(i) 净资产不低于 1,000,000 美元；或(ii)总资产不低于 5,000,000 美元的人士。
c. . 公司、合伙企业或信托其股东、有限合伙人或信托单位持有人属于专业人士或高净值人士。
d. 在境外从事证券投资交易且受相关国家/地区监管证券投资业务的机构监管的实体。
如果该实体符合上述类别之一，则只需向CIMA注册为“登记人士” （取代了之前的“豁免人士”）。注册过程简单直接，包括提交申请表（附上每位10％最终实际受益人的资料和声明），并支付6100美元的登记费。如果CIMA认为该实体股东和运营者/高级管理人员是“适格人士”，那么CIMA将完成其登记并颁发注册证书
与CIMA注册的基金一样，登记人士必须至少任命两名个人董事/经理或一名公司董事/经理，每一位董事/经理需根据开曼《2014 年董事注册及牌照法》在CIMA注册。
根据国际惯例，登记人士还须任命一名反洗钱合规官、洗钱调查官和副洗钱调查官，并制定适当的政策和程序来打击洗钱、资助恐怖主义和扩散活动。
与根据SIBL持有CIMA牌照的机构不同，登记人士（a）无需提交经审计的年度财务报表或商业规划，（b）任何变更董事、股东或实际受益人无需预批准，并且（c）不受SIBL有关特定商业行为和财务要求的约束。
经济实质要求
开曼群岛的管理人和顾问需考虑的另一项监管要求是有关满足经济实质法的要求。简而言之，“相关实体”进行“相关活动”产生的总收入必須满足经济实质测试（ES测试）。
目前“投资基金”（包括通过其投资的实体）不属于“相关实体”，因此不受经济实质测试的约束。 然而，登记人士可能是“相关实体”，但“基金管理业务”是SIBL管理范畴中唯一可能属于“相关活动”的业务。 因此，仅担任顾问的登记人士可能不需要接受经济实质测试。
担任基金管理人的实体须符合相应的经济实质测试，标准如下：（i）在开曼群岛进行与“基金管理业务”相关的核心创收活动； （ii）在开曼群岛以适当的方式进行指导和管理；以及（iii）就“基金管理业务”所产生的收入而言，在开曼群岛产生足够的运营支出、有充足的办公场所以及足够数量的全职员工或其他具有适当资格的人员。 我们就如何满足特定的经济实质测试提供建议。值得一提的是，管理人可以将核心创收活动外包，目前越来越多的管理人正在利用这一优势。
总结
在2019年初，根据SIBL登记的2926名“豁免人士”必须在2020年1月15日之前重新注册为登记人士或通过重组使该实体不再从事证券投资业务。 同时，他们需要考虑如何遵守经济实质法的规定。 现在，我们看到越来越多的登记人士成功注册，且注册过程将会越来越顺利。随着监管框架的不断完善，尽管可能影响到注册程序的效率且持续监管措施会提升成本，我们可预期开曼群岛的管理人或顾问将继续在亚洲基金结构中发挥重要作用。
