The Mutual Funds Act — Cayman Islands (2025 Revision)
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The Mutual Funds Act is Cayman's regime for open-ended funds, whose investors can have their interests redeemed or repurchased at their option. A Cayman fund doing business in or from the Islands must use one of four routes to supervision by the Cayman Islands Monetary Authority (CIMA) (section 4). Every regulated mutual fund then has its accounts audited each year by a CIMA-approved auditor and pays an annual fee by 15 January (sections 8 and 9). An amending Act published in March 2026 adds rules for tokenised funds. It is the open-ended counterpart to the Private Funds Act.
Scope and the fund categories
A "mutual fund" is a company, unit trust or partnership that issues equity interests to pool investor money and spread risk (section 2). An equity interest carries a share of the profits and is redeemable or repurchasable at the investor's option. Debt is excluded. Section 2A states that the Act applies to licensed or registered mutual funds and to EU Connected Funds, which Part 3A covers. Section 4 then sets the four routes. An overseas fund need not comply with section 4(1) if a Cayman securities licensee offers it to the Cayman public. The licence must cover an activity CIMA specifies for this purpose. Its interests must also be listed on an exchange CIMA specifies, or it must be regulated by an overseas regulator CIMA approves, in an approved category (section 4(4)(b)).
| Route | The test in the Act | Section |
|---|---|---|
| Licensed fund | Holds a Mutual Fund Licence. It has a Cayman registered office or, for a unit trust, a licensed Cayman trust company as trustee. | 4(1)(a) |
| Administered fund | Registered with CIMA, with a licensed mutual fund administrator providing its principal office in the Islands. A current offering document is filed unless CIMA exempts the fund. | 4(1)(b) |
| Registered fund | Either the minimum an investor can buy is eighty thousand dollars (or the equivalent in another currency), or the interests are listed on an exchange CIMA specifies. The fund files the prescribed offering details, registers and pays the annual registration fee. | 4(3) |
| Limited-investor fund | No more than fifteen investors, a majority of whom can appoint or remove the operator. Unless CIMA exempts it, the fund files a certified extract of its constitution showing that power and the prescribed information, registers and pays the fee. A master fund cannot use this route. | 4(4)(a) and 4(4A) |
The duties that follow are the same backbone for every route. The accounts are prepared under IFRS or the GAAP of the US, Japan, Switzerland or a non-high-risk jurisdiction, and audited by a CIMA-approved auditor (section 8(1) to (1B)). The audited accounts reach CIMA within six months of the financial year end (section 8(2)). The annual fee is due by 15 January, with one twelfth added for each month or part of a month it stays unpaid (section 9). Each fund also files a return in the prescribed form, at the prescribed intervals (section 29(2A)). Where an offering continues, the clock starts when a promoter or operator becomes aware of a material change. Within twenty-one days, an amended offering document or amended prescribed details must reach CIMA (section 4(8)). The full text is searchable clause by clause through the Graph of rules and ask-the-law.
What changes for a tokenised mutual fund?
The Mutual Funds (Amendment) Act, 2026 defines a "tokenised mutual fund" as a mutual fund with any of its equity interests represented by digital equity tokens. A digital equity token is a digital representation of the whole of an investor's equity interest. The Act also extends "equity interest" and "debt" to LLC interests, and retitles section 2 "Interpretation".
| Who | Duty | Section |
|---|---|---|
| Licensed administrator | Where it administers the fund, it must be satisfied that the tokenised fund securely maintains records of each tokenised interest. They cover issue, sale, transfer and ownership. The fund must make those records available to CIMA or its assignee and meet the other applicable requirements. | 16(1)(e) |
| Operator | Confirms to CIMA each year that those records have been properly kept. A tokenised interest transfers only with the operator's approval, as the offering document sets out. | 22I(2) and (3) |
| The fund | Discloses token-specific risks in the offering document, including cybersecurity and transferability, and how they are addressed or mitigated. Meets any periodic reporting CIMA specifies. | 22I(4), (5) and (7) |
| CIMA | May restrict the characteristics of the tokens and request more information on an application. It monitors compliance and may inspect the underlying technology and token transactions. | 22I(6), 22I(8) and 22J |
In practice: the section 4 route follows from how the fund is structured and sold, and it sets the CIMA filings and fees that follow. For a tokenised fund, the offering document must cover the token risks, and the operator confirms the token records to CIMA each year. Where a licensed administrator administers the fund, it must first be satisfied on those records.
To verify
- Commencement of Act 5 of 2026. The Act has no commencement section. It was assented on 19 March 2026 and published in the Gazette on 24 March 2026; confirm the in-force date against the Cayman Interpretation Act.
- Currency of the section 4(3) minimum. The Act says "eighty thousand dollars". Confirm the currency against the definition of "dollar" in the Cayman Interpretation Act before quoting a US-dollar figure.
- Prescribed details, returns and fees. Sections 4, 9 and 29(2A) leave the forms and amounts to regulations. Confirm the current Mutual Funds (Annual Returns) and (Fees) Regulations on the CIMA site.
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3 changes to the law and guidance · latest 2026-10-06
- 2026-10-06 — corrected: this page described the Mutual Funds Act (2021 Revision) as the current consolidated text. The current text is the 2025 Revision, revised as at 1 January 2025, which replaced the 2021 Revision.
- 2026-10-06 — corrected: the registered-fund minimum was quoted as a US-dollar equivalent, US$100,000. It now uses the Act's own wording, "eighty thousand dollars (or its equivalent in any other currency)", pending confirmation of the currency (section 4(3)(a)(i), 2025 Revision).
- 2026-03-24 — The Mutual Funds (Amendment) Act, 2026 (Act 5 of 2026) was published in the Gazette (Supplement No. 1, Legislation Gazette No. 16). It adds tokenised mutual funds: new definitions in section 2, a new section 16(1)(e) and a new Part 3B (sections 22I and 22J).