4.3 SETTING UP IN THE CAYMAN ISLANDS

There is a basic process for the setup of an offshore fund in each jurisdiction. Every domicile will use its own specific legal/regulatory terminology but the process in itself is fairly similar. Since the Cayman Islands are among the most popular chosen jurisdictions for the setup of alternative vehicles, I will describe the general setup process for an average Cayman Islands exempted company that will be registered as a mutual fund. ^[27]

Funds need to undergo an incorporation ^[28] process before they can be registered. Accordingly, the registration process is divided into two steps: the first step creates the entity, and the second step provides this entity with the right to function as an investment vehicle. In spite of that, because mutual funds are exempted companies they are not regulated by two different authorities as one might expect; the entity which has been formed as an exempted company is exempt from the Companies law but must be registered with the Registrar of Companies (the Registrar); the mutual fund, however, is regulated by the Mutual Funds Law under the authority of the Cayman Islands Monetary Authority (the CIMA). ^[29]