The Private Funds Act — Cayman Islands (2025 Revision)
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The Private Funds Act is Cayman's regime for closed-ended funds: private equity, venture, credit and real-estate vehicles whose investors cannot redeem at will. A private fund applies to the Cayman Islands Monetary Authority (CIMA) within twenty-one days after it accepts capital commitments. It may not take capital contributions until CIMA registers it (section 5). It pays an annual registration fee. Once it receives capital contributions, it also owes an annual audit and return, and duties on how its assets are valued, held and checked. It is the closed-ended counterpart to the Mutual Funds Act, which covers open-ended funds.
Scope and the core obligations
The Act covers Cayman private funds and overseas ones inviting the Cayman public to subscribe. Such a fund must apply to register within twenty-one days after it accepts capital commitments (section 5(1)(a)). It must also file the prescribed details, pay the annual fee and meet any conditions CIMA sets. An overseas fund need not comply with section 5(1) if it is offered through a Cayman securities licensee whose licence covers 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 (section 5(3)). Before applying, it may talk to and sign agreements with high net worth or sophisticated persons (section 5(5)). It may not accept capital contributions until CIMA has registered it (section 5(6)). The Part 3 duties below apply once the fund receives capital contributions (section 3(2)).
| Duty | What the Act requires | Section |
|---|---|---|
| Annual audit | A CIMA-approved auditor audits the accounts each year. The accounts use IFRS or the GAAP of the US, Japan, Switzerland or a non-high-risk jurisdiction. They reach CIMA within six months of the year end. | 13 |
| Return and fee | A return in the prescribed form for each financial year. The annual registration fee is due by 15 January. One twelfth is added for each month or part of a month it stays unpaid. | 14 and 10 |
| Valuation | The fund needs sound, consistent procedures. It values its assets as often as suits the assets, and at least once a year. The valuer can be an independent third party with suitable professional qualifications in a non-high-risk jurisdiction, or an administrator the fund appoints. It can also be the manager or operator, if valuation is independent of portfolio management or conflicts are identified, managed, monitored and disclosed to investors. | 16 |
| Safekeeping | A custodian holds the custodial assets in segregated accounts in the fund's name or for its account, and verifies title to the rest. The fund need not appoint one if it has notified CIMA and a custodian is neither practical nor proportionate, given the fund and its assets. It then appoints someone to verify title: an administrator or other independent third party, or the manager or operator on the same independence or conflicts test. | 17 |
| Cash monitoring | An appointed person tracks cash flows. They check that all cash is booked in accounts opened in the name, or for the account, of the fund, and that investor payments have arrived. This can be an administrator, custodian or other independent third party, or the manager or operator on the same independence or conflicts test. | 18 |
| Securities identification | A fund that often trades or holds securities keeps a record of their codes, such as the ISIN. CIMA can ask to see it. | 19 |
Where an independent party does not do the work, CIMA may require an independent check (sections 16(5), 17(5) and 18(3)). The full text is searchable clause by clause through the site's Graph of rules and ask-the-law.
What changes for a tokenised private fund?
The Private Funds (Amendment) Act, 2026 defines a "tokenised private fund": a private fund with any of its investment interests held as digital investment tokens. Each token stands for the whole of one investor's interest. The Act also extends "debt" to LLC interests and adds a definition of "partnership interest".
| Stage | Duty | Section |
|---|---|---|
| Registration | A tokenised fund applies in the prescribed manner. It keeps secure records of each tokenised interest and gives CIMA access within the period CIMA sets. | 6(3) |
| Records and transfers | The 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. | 19A(2) and (3) |
| Disclosure and reporting | The offering document sets out the token risks, such as cybersecurity and transfer, and how they are handled. The fund files any periodic reports CIMA asks for. | 19A(4), (5) and (7) |
| Supervision | CIMA may limit what the tokens can do and ask for more facts on an application. It checks compliance and may inspect the technology and token trades. | 19A(6), 19A(8) and 19B |
In practice: the twenty-one-day clock runs from the acceptance of capital commitments, but no capital contribution may be taken until CIMA has registered the fund. Time the application and the auditor approval so that registration is in place before the first capital call.
To verify
- Commencement of Act 6 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.
- Private Funds Regulations — the operational detail (valuation, safekeeping, cash monitoring standards) sits partly in the Regulations; confirm the current Regulations revision alongside the Act.
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3 changes to the law and guidance · latest 2026-10-06
- 2026-10-06 — corrected: this page said accepting commitments before registration is the exposure. A fund applies within twenty-one days after accepting capital commitments, and may not accept capital contributions until registered (sections 5(1)(a) and 5(6)).
- 2026-10-06 — corrected: this page said valuation, safekeeping and cash monitoring are each performed by an appropriately independent person. The manager or operator may value the assets and monitor cash, and may verify title where the fund has no custodian. Each needs the function to be independent of portfolio management, or conflicts identified, managed, monitored and disclosed (sections 16(4), 17(3)–(4) and 18(1)).
- 2026-03-24 — The Private Funds (Amendment) Act, 2026 (Act 6 of 2026) was published in the Gazette (Supplement No. 2, Legislation Gazette No. 16). It adds tokenised private funds: new definitions in section 2, a new section 6(3) and new sections 19A and 19B.