Mutual Fund or Private Fund? Which CIMA Regime Applies

Whether a Cayman fund falls under the Mutual Funds Act (2025 Revision) or the Private Funds Act (2025 Revision) turns on a single question: are the interests redeemable or repurchasable at the option of the investor. If they are, the vehicle issues equity interests and is a mutual fund. If they are not, it issues investment interests and is a private fund. Strategy, asset class and investor type are irrelevant to that classification. Both regimes now carry the same CIMA annual fee of CI$4,125 / US$5,030.49, effective 1 January 2026, so the choice is structural rather than financial.

Managers arrive with a strategy label and expect it to select the regime. It does not. The redemption clause selects the regime, and every registration, audit and operating obligation follows from that one drafting decision.

David Lloyd, Chief Executive Officer at CV5 Capital

Executive Summary

The two Cayman fund statutes are complements rather than alternatives, and a manager cannot elect between them. The classification is decided by the constitutional documents, then the registration category, timing and operating obligations follow.

• The dividing line is the definition of equity interest in section 2 of the Mutual Funds Act (2025 Revision) against investment interest in section 2 of the Private Funds Act (2025 Revision), and the definitions are mirror images.
• A lock-up, notice period or gate does not remove a redemption right, and a right of the operator to repurchase at its discretion is not a right of the investor.
• Under the Mutual Funds Act, registration, administration or licensing must be in place before the fund carries on business, whereas the Private Funds Act allows twenty-one days from acceptance of capital commitments.
• Section 4(4) of the Mutual Funds Act requires both limbs, being not more than fifteen investors and a majority of them capable of appointing or removing the operator, and the audit requirement still applies.
• The CI$80,000 minimum in section 4(3)(a)(i) is the statutory figure, while US$100,000 is market convention, equivalent to US$97,561 at CIMA's published conversion basis.
• The tokenised fund amendments that took effect on 24 March 2026 are a wrapper on an existing regime, not a third regime.

The short answer

The Mutual Funds Act (2025 Revision) regulates open-ended funds and the Private Funds Act (2025 Revision) regulates closed-ended funds. There is no third category and no election available to the manager. The classification follows from one clause in the articles, the trust deed or the limited partnership agreement: the redemption provision. If an investor can require the fund to redeem or repurchase its interest before winding up, the interest is an equity interest and the vehicle is a mutual fund. If it cannot, the interest is an investment interest and the vehicle is a private fund.

Most published comparisons open with hedge funds against private equity funds. That is useful shorthand and a poor test. A private credit fund offering monthly redemptions after a two-year lock is a mutual fund. A liquid digital asset fund with no investor redemption right and a fixed term is a private fund. Applying the strategy label rather than the statutory definition is the most common route to the wrong regime, and it is usually found by the auditor or the administrator after first close.

The single question that decides it: is the interest redeemable at the investor's option

Section 2 of the Mutual Funds Act (2025 Revision) defines an equity interest as a share, trust unit or partnership interest. It must carry an entitlement to participate in the profits or gains of the vehicle. It must also be redeemable or repurchasable at the option of the investor before the commencement of winding up. Section 2 of the Private Funds Act (2025 Revision) defines an investment interest in materially the same terms, save that it is not so redeemable. The definitions are complements, so a vehicle issuing one cannot be issuing the other.

Four points decide almost every borderline case.

A lock-up does not defeat redeemability. A right to redeem exercisable only after three years is still a right to redeem at the option of the investor. The right exists from issue and only its exercise is deferred.

Gates, suspensions and notice periods do not defeat it either. A gate limits how much can be redeemed on a dealing day, and a suspension power stops redemptions temporarily in defined circumstances. Neither removes the underlying right. A fund with quarterly dealing, ninety days of notice, a 25% investor-level gate and a suspension power is open-ended.

A repurchase right vested in the operator is not a redemption right of the investor. This is where the wrong answer most often comes from. Where the fund may repurchase at the discretion of the board or general partner and the investor cannot compel it, the interest is not redeemable at the investor's option. Periodic discretionary tender offers, common in evergreen and continuation structures, sit on this side of the line. The test is whether the investor can compel, not whether liquidity is in practice available.

The classification can change during the fund's life. Amending the constitutional documents to introduce an investor redemption right moves the vehicle between Acts. That is a deregistration under one regime and a registration under the other, and it should be modelled before a conversion to an evergreen structure is marketed.

Look at the constitutional document rather than the deck: the articles and share class terms in a company, the withdrawal and distribution provisions in an exempted limited partnership, and the trust deed in a unit trust. See redemption terms explained and the Cayman exempted limited partnership, GP and LP.

The Mutual Funds Act categories and what each requires

Deciding that a fund is open-ended answers half the question. Section 4(1) then prohibits a mutual fund from carrying on or attempting to carry on business in or from the Islands. Two routes escape that prohibition: holding a Mutual Fund Licence under section 4(1)(a), or being registered with a licensed mutual fund administrator providing the principal office under section 4(1)(b). Section 4(3) and section 4(4) provide the two routes that permit a fund to carry on business without complying with section 4(1). Master funds register under section 4(3) in their own right where the conditions are met.

The annual fee is identical across every non-master category, so the choice between licensed, administered, registered and limited investor is driven by which conditions the fund can satisfy rather than by cost. Section 4(3) is the default because the CI$80,000 minimum is usually acceptable to the investor base an emerging manager is actually addressing. See the Cayman Mutual Funds Act and CIMA explained.

The section 4(4) limited investor fund

Section 4(4)(a) covers a mutual fund whose equity interests are held by not more than fifteen investors, a majority of whom are capable of appointing or removing the operator. Both limbs are conditions and both must be satisfied continuously. Twelve investors none of whom can appoint or remove the operator does not qualify, and neither does a removal power held by a minority. The operator is the directors of a company, the general partner of a partnership or the trustee of a unit trust.

It is a registration category, not an exemption. Before the 2020 amendments these funds sat outside CIMA registration. They do not now. Section 4(4)(a) requires the fund to file the prescribed constitutional extract and other prescribed information, to be registered with CIMA in the prescribed manner, and to pay the prescribed annual registration fee of CI$4,125 / US$5,030.49.

The audit requirement applies. There is no small-fund relief. Section 8 of the Mutual Funds Act requires accounts to be audited annually by an auditor approved by CIMA and filed within six months of the financial year end, as for any other regulated mutual fund. Managers selecting this category to avoid audit cost have misread it. See first-year audit and filings.

Fifteen is a live constraint, not a launch snapshot. A sixteenth investor takes the fund outside the category, requiring either restructured terms meeting the CI$80,000 minimum in section 4(3) or the appointment of an administrator to provide the principal office. Neither is instant. A manager expecting to pass fifteen investors in year one should generally register under section 4(3) at the outset.

The section 4(3) registered fund and the CI$80,000 minimum

Section 4(3)(a)(i) requires that the minimum aggregate equity interest purchasable by a prospective investor is eighty thousand dollars, or its equivalent in any other currency, unless the equity interests are listed on a stock exchange specified by CIMA. The statute states CI$80,000. It does not state US$100,000.

US$100,000 is convention. It is a round number in the currency most funds are denominated in and it comfortably clears the statutory floor. At CIMA's published conversion basis of CI$1 = US$1.21951, CI$80,000 is US$97,561. A fund setting its minimum at US$97,561 would also comply, and none does.

The distinction matters in three places. Non-sterling and non-dollar funds must set a minimum at least equivalent to CI$80,000, and a minimum fixed in a currency that subsequently weakens can fall below the floor. Feeder structures that set the feeder minimum by reference to the master need the same test applied at the feeder. And side letters or founder classes offering a reduced minimum below CI$80,000 breach the condition on which registration rests. Founder economics should be delivered through fee terms rather than a reduced subscription minimum. See the founder share class playbook and side letters, governance and risk.

Master funds: when the master itself must register

A Cayman master fund is neither automatically registrable nor automatically outside the regime. Registration under section 4(3)(a)(iii) is triggered where the master is a Cayman mutual fund issuing equity interests to one or more regulated feeder funds, or to the general partner or trustee of one. The master must also hold investments and conduct trading to implement that feeder's overall investment strategy. A regulated feeder fund is one conducting more than 51% of its investing through another mutual fund.

The consequences follow from the word regulated.

• A Cayman master with a Cayman feeder registered under section 4(3) has a regulated feeder, so the master registers and pays CI$3,075 / US$3,750.00 annually. Statutory CIMA cost for the pair is CI$7,200 / US$8,780.49.
• A Cayman master whose only feeders are non-Cayman vehicles that are not regulated mutual funds does not meet the master fund trigger. That does not end the analysis. The master may still be a mutual fund in its own right if it issues redeemable equity interests to more than one investor, in which case it must satisfy a section 4 category on its own account.
• A mini-master structure, where principals or the manager invest directly into the master alongside a single regulated feeder, still has a regulated feeder, so the master still registers.
• Where the only feeder is unregulated and the master has a single investor, the pooling limb of the mutual fund definition itself comes into question. That is fact-specific and should be confirmed with Cayman counsel.

Registered master funds carry the same annual audit obligation as any other regulated mutual fund, so the lower fee is a lower fee rather than a lighter regime. See why most emerging managers do not need a master-feeder, master-feeder structures explained and the mini-master structure.

The Private Funds Act: scope and what is excluded

A private fund under section 2 of the Private Funds Act (2025 Revision) is a company, unit trust or partnership whose principal business is offering and issuing its investment interests. The purpose or effect of that offering must be the pooling of investor funds, with the aim of spreading investment risks. It must also enable investors to receive profits or gains from the acquisition, holding, management or disposal of investments. The holders of investment interests must not have day-to-day control over the investments, and the investments must be managed as a whole by or on behalf of the operator.

Four elements must be present: pooling, spreading of investment risk, absence of day-to-day investor control, and management as a whole by or on behalf of the operator. Remove any one and the vehicle falls outside the definition. The definition then expressly excludes a non-fund arrangement, defined by reference to the Schedule to the Act.

Section 32 empowers Cabinet to amend that Schedule. As it stands, the Schedule lists these categories of non-fund arrangement, in order.

• Pension funds; securitisation special purpose vehicles; contracts of insurance.
• Joint ventures; proprietary vehicles; holding vehicles.
• Officer, manager or employee incentive, participation or compensation schemes, and programmes or schemes to similar effect.
• Individual investment management arrangements; pure deposit-based schemes; arrangements not operated by way of business.
• Debt issues and debt issuing vehicles; common accounts; franchise arrangements.
• Timeshare and long-term holiday product schemes; schemes involving the issue of certificates representing investments.
• Clearing services; settlement services; funeral plan contracts; individual pension accounts.
• Structured finance vehicles; preferred equity financing vehicles.
• Funds whose investment interests are listed on a stock exchange specified by CIMA by notice in the Gazette.
• Occupational and personal pension schemes; sovereign wealth funds; single family offices.

The Schedule is the part of the Act most often relied on and most often relied on wrongly. The categories are definitional exclusions rather than discretionary reliefs, and their conditions must be satisfied in full and continuously. The statutory wording is the test. The notes below are practitioner observation on where reliance typically fails in the categories fund managers actually reach for, and are not a statement of the statutory conditions.

Two further scope points. Alternative investment vehicles formed by a registered private fund are not separately registered as private funds but attract the increment of CI$525 / US$640.24 each. And a single-investor vehicle raises the pooling question directly, because pooling is a definitional element rather than a threshold. That analysis is fact-specific and CIMA's view should be established rather than presumed. See the Cayman fund-of-one structure and the Cayman Private Funds Act.

Registration triggers and timing: the twenty-one day rule and what it runs from

This is where the regimes diverge operationally, and where published content is least reliable.

Under the Mutual Funds Act there is no grace period. Section 4(1) prohibits a mutual fund from carrying on or attempting to carry on business unless licensed or administered, and sections 4(3) and 4(4) each make registration a condition of the alternative route. Registration must therefore be in place before the fund issues equity interests. The complete filing package has to be lodged and processed before the first subscription is accepted. That package comprises the prescribed particulars, the offering document or the prescribed details where there is none, the auditor's consent, the administrator's consent where applicable, and the fee. The dealing calendar is built backwards from the registration date.

Under the Private Funds Act there is a twenty-one day window, and it does not run from where most people think. Section 5(1)(a) requires the fund to have submitted an application for registration in accordance with section 6 within twenty-one days after its acceptance of capital commitments from investors for the purposes of investments. Section 5(6) provides that a private fund required to be registered shall not accept capital contributions from investors in respect of investments until it is registered by CIMA in accordance with section 7.

These are two different events and two different obligations. A commitment is a binding undertaking to contribute capital when called. A contribution is the actual transfer of cash or assets. In a drawdown structure they are separated by weeks or months, because the subscription agreement is countersigned at first closing and the first drawdown notice may not follow until the manager has something to buy.

1. The clock starts at the earlier event. The twenty-one days runs from the fund's acceptance of the commitment, ordinarily countersignature of the subscription agreement at first close. It can expire before a single dollar has moved. A manager who assumes the clock starts at first drawdown will file late, and will have been late from first close.
2. The prohibition bites at the later event. Section 5(6) does not restrict taking commitments. It restricts taking contributions. A fund may lawfully hold binding commitments while unregistered, provided the application was made within the window, but it may not receive the money.
3. Compliance with section 5(1)(a) is not compliance with section 5(6). Filing on day twenty-one meets the application deadline but does not authorise contributions, because registration is CIMA's act under section 7 rather than the applicant's. A fund that files on day twenty-one and issues a drawdown notice payable on day twenty-five can be compliant with section 5(1)(a) and in breach of section 5(6) simultaneously.
4. Acceptance is the fund's act, not the investor's. The trigger is when the fund accepts the commitment, not when the investor offers it. Executed subscription documents held unaccepted pending first close are not, on their own, accepted commitments. Countersignature is the event to diarise, and its date should be recorded contemporaneously rather than reconstructed later.
5. Early closes compress the window. A cornerstone investor admitted ahead of the main close starts the clock for the fund as a whole. Managers who run a quiet early close for a seed investor and a marketed first close three months later have often already missed the deadline by the time the main close happens.

Section 5(5) permits a private fund and persons acting on its behalf to communicate and contract with high net worth or sophisticated persons before the section 6 application is filed, subject always to section 5(6). The workable rule is therefore to treat first close as the trigger for both provisions, file immediately rather than on day twenty-one, and issue no drawdown notice with a payment date before registration is confirmed. Filing early costs nothing. Filing late puts a regulatory breach on the fund's record at the point it is first answering operational due diligence questionnaires. See drawdown structures and capital calls.

Where the regimes differ operationally: audit, valuation, safekeeping and cash monitoring

The Acts converge on audit and diverge sharply on operational controls. The Private Funds Act imposes a prescriptive statutory operating regime in sections 16 to 19 that has no counterpart in the Mutual Funds Act. This is the largest substantive difference between the two and it is routinely reduced, in published comparisons, to a sentence about similar requirements.

Two readings of that table. The private fund operating obligations are appointments, and appointments cost time and money, so a launch budget covering administration and audit but not cash monitoring and title verification is incomplete. And the mutual fund regime's lighter statutory requirements are not a lighter operational standard, because allocator due diligence applies the same expectations either way. The regime sets the floor and the market sets the level. See the fund valuation policy and governance and ODD readiness.

What each regime costs in 2026

Statutory CIMA fees for both regimes changed on 1 January 2026. The figures below are from the CIMA website fee schedule updated 1 January 2026 and the CIMA notice on revisions to fees payable by regulated mutual funds and regulated private funds. They are not commercial quotations.

Do not cite the Mutual Funds (Fees) Regulations (2026 Revision) as authority for 2026 fees. That instrument was consolidated on 31 December 2025, the day before the increases took effect, and therefore contains the superseded figures of CI$3,675, CI$2,625 and CI$300. The current authority is the CIMA fee schedule dated 1 January 2026.

The headline fee is regime-neutral and the increments are not. A registered mutual fund and a registered private fund both pay CI$4,125 / US$5,030.49. Under an umbrella they diverge, at CI$750 / US$914.63 per mutual fund sub-fund against CI$525 / US$640.24 per private fund segregated portfolio, alternative investment vehicle or separate account. On a six-portfolio umbrella that is CI$8,625 / US$10,518.27 against CI$7,275 / US$8,871.93 at the statutory layer, both compared with CI$24,750 / US$30,182.94 for six separately registered standalone funds. See the segregated portfolio company and SPC against standalone cost comparison.

Dates that bind in 2026

• 15 January annually: CIMA annual fees fall due, as do renewals under the Directors Registration and Licensing Act.
• 15 March 2026: the end of CIMA's extended grace period for settling the incremental element of the revised annual fees. The pre-revised annual fee remained due on 15 January 2026 and is subject to penalties from that date.
• Six months after the financial year end: audited accounts and the annual return, under section 8 of the Mutual Funds Act and sections 13 and 14 of the Private Funds Act.

Fees under the Directors Registration and Licensing Act were not part of the 1 January 2026 fund fee revisions. They are set separately, differ between a registered director, a professional director and a corporate director, and fall due annually on or before 15 January. The current figures should be taken from CIMA's directors registration and licensing fee page rather than from secondary commentary.

The commercial layer

Statutory fees are a minority of the cost of either regime. The line items below are the ones that need pricing before a launch budget is credible, and they are quoted on enquiry rather than published, because they turn on strategy, asset class, dealing frequency and the number of portfolios.

• Fund administration, priced separately for an open-ended dealing calendar and for a drawdown structure.
• Audit by an auditor approved by CIMA.
• Legal formation and offering document drafting, as a one-off cost.
• Independent directors, at commercial rates that sit above the statutory registration fees.
• AML officer appointments, being an AMLCO, an MLRO and a deputy MLRO who must be a different person from the MLRO.
• Registered office and corporate services.
• For private funds only, the cash monitoring appointment under section 18 and the safekeeping or title verification appointment under section 17.
• Directors and officers cover.
• A segregated portfolio on a platform, as the all-in alternative to assembling the above.

It does not follow that a platform suits every manager. Standalone is the better answer for managers running an existing multi-fund programme, managers whose anchor allocator mandates a standalone vehicle, managers needing a bespoke structure an umbrella cannot accommodate, and managers at sufficient scale that the fixed cost is immaterial. The full comparison is in platform against standalone: cost, timeline and risk and Cayman hedge fund formation cost in 2026.

The 2026 tokenised fund provisions and how they sit across both Acts

The tokenised fund amendments took effect on 24 March 2026. The Mutual Funds (Amendment) Act 2026 inserts a new Part 3B, Tokenised Mutual Funds, comprising sections 22I and 22J, after Part 3A. The Private Funds (Amendment) Act 2026, Act 6 of 2026, inserts sections 19A and 19B into the Private Funds Act.

The definitions are the analytically important part. A tokenised mutual fund is a mutual fund that has any of its equity interests represented by digital equity tokens. A digital equity token is a digital representation of the whole of an equity interest held by an investor in a mutual fund. A tokenised private fund is a private fund that has any of its investment interests represented by digital investment tokens, defined on the same pattern. Each definition begins by requiring the vehicle to be a mutual fund or a private fund already. Tokenisation is a characteristic of an interest that has been classified, not an alternative classification.

1. Tokenisation is a wrapper, not a third regime. There is no tokenised fund regime a manager can enter instead of the Mutual Funds Act or the Private Funds Act. The redeemability question is answered first and produces the base regime, and Part 3B or section 19A is layered on top. Asking whether to be a tokenised fund or a mutual fund is a question with no answer.
2. The word any is doing work. Both definitions bite where any interests are represented by digital tokens. A fund with one tokenised share class alongside four conventional classes is a tokenised mutual fund. Partial tokenisation does not produce partial application.
3. Issuance by the fund itself is outside the VASP regime. The Virtual Asset (Service Providers) (Amendment) Act 2026 excludes the issuance of digital equity tokens and digital investment tokens by tokenised mutual funds and tokenised private funds from the virtual asset service provider regime. That removes a genuine structuring obstacle. It does not exempt any other party in the chain, and it does not address custody, exchange or transfer services provided by others. See where the VASP licensing line falls for tokenised Cayman funds.

The operative requirements are additional to, not in substitution for, the registration and ongoing requirements of the base regime. They run in parallel across both Acts. Section 22I of the Mutual Funds Act and section 19A of the Private Funds Act each require the operator to do the following.

• Confirm annually to CIMA that the records concerning the issuance, creation, sale, transfer and ownership of the tokens have been properly kept and maintained.
• Ensure that the tokens are transferable only with the approval of the operator, in accordance with the offering document.
• Disclose in the offering document the risks specific to the tokens, including cybersecurity and transferability risks.
• Explain in the offering document how those risks are addressed or mitigated for investors.
• Observe any restrictions CIMA imposes on the characteristics of the tokens.
• Meet any periodic reporting CIMA specifies.

Section 22J and section 19B give CIMA supervisory powers, including inspection of the underlying technology and of token transactions. Work from the current consolidated text rather than from commentary published before 24 March 2026, because very little of what is presently indexed on this subject has been updated for the amendments. See the tokenised Cayman fund handbook, the CIMA tokenised fund questionnaire in practice and tokenised funds.

Decision tree, and what this article does not settle

The classification has a determinate answer structure. Work through it in order and stop at the first outcome.

1. Does the vehicle pool investor funds with the aim of spreading investment risk, with investors having no day-to-day control and the investments managed as a whole by or on behalf of the operator? If no, it is likely outside both Acts. Confirm against the Schedule of non-fund arrangements and take Cayman advice. If yes, continue.
2. Can an investor require the vehicle to redeem or repurchase its interest before winding up? Ignore lock-ups, notice periods, gates and suspension powers, which regulate exercise rather than existence. Ignore repurchase rights vested in the operator, which are not investor rights. If yes, go to 3. If no, go to 7.
3. Mutual Funds Act applies. Does the fund issue equity interests to one or more regulated feeder funds, or to the general partner or trustee of one, and hold investments and conduct trading to implement that feeder's strategy? If yes, register as a master fund under section 4(3)(a)(iii) at CI$3,075 / US$3,750.00 annually. If no, continue.
4. Are the equity interests held by not more than fifteen investors, a majority of whom can appoint or remove the operator? Both limbs must hold. If yes, section 4(4)(a) limited investor fund, and audit still applies. If no, continue.
5. Is the minimum aggregate equity interest purchasable by a prospective investor at least CI$80,000, or are the interests listed on a stock exchange specified by CIMA? If yes, section 4(3) registered mutual fund. If no, continue.
6. Will a licensed mutual fund administrator provide the fund's principal office in the Islands? If yes, administered mutual fund under section 4(1)(b). If no, a Mutual Fund Licence under section 5 is the remaining route. In every case registration, administration or licensing must be in place before the fund carries on business.
7. Private Funds Act applies unless an exclusion holds. Is the vehicle a non-fund arrangement under the Schedule, an alternative investment vehicle of a registered private fund, or otherwise outside the section 2 definition? Conditions must be satisfied in full and continuously. If an exclusion holds, no registration. If not, continue.
8. Registered private fund. Apply within twenty-one days after acceptance of capital commitments under section 5(1)(a). Accept no capital contributions until registered, under section 5(6). CI$4,125 / US$5,030.49 on registration and annually.
9. In either branch, are any interests represented by digital equity tokens or digital investment tokens? If yes, Part 3B of the Mutual Funds Act or section 19A of the Private Funds Act applies in addition, in force from 24 March 2026. The base regime is unchanged.

What this article does not settle

• Hybrid and evergreen terms. Structures combining a fixed term with discretionary periodic liquidity, or a closed-ended core with an open-ended sleeve, require the redemption clause to be tested provision by provision. The same commercial arrangement can be documented either way.
• Single-investor vehicles. Pooling is a definitional element of both statutes. Whether a one-investor vehicle pools is fact-specific and should be established with Cayman counsel rather than presumed in either direction.
• Reliance on the Schedule. Conditions must be satisfied in full and continuously. A vehicle that qualified at formation may not qualify a year later, and section 32 permits the Schedule itself to be amended.
• The manager's own position. The fund's regime does not determine the manager's. A Cayman investment manager will ordinarily be a registered person under the Securities Investment Business Act (2020 Revision) rather than a licensee. That is registration, not licensing, and the fee is set by regulation, payable on registration and annually, and revised periodically, so it should be taken from the current fee schedule. See SIBA explained.
• Out of scope. Non-Cayman funds marketing into the Islands, EU Connected Funds under Part 3A of the Mutual Funds Act, the anti-money laundering regime and officer appointments, economic substance, and FATCA, CRS and CARF reporting. The annual compliance calendar covers the obligations that follow registration under either Act.

Key Takeaways

• Test the redemption clause in the draft constitutional documents before the offering document is written, because that clause and not the strategy label selects the regime.
• Diarise countersignature of the first subscription agreement as the section 5(1)(a) trigger, and file the private fund registration application immediately rather than on day twenty-one.
• Never issue a drawdown notice with a payment date falling before CIMA has confirmed registration under section 7.
• Build the open-ended dealing calendar backwards from the mutual fund registration date, because there is no grace period under section 4(1).
• Price the private fund appointments under sections 17 and 18 into the launch budget from the outset, alongside administration and audit.
• Where founder economics are being offered, deliver them through fee terms rather than a subscription minimum below CI$80,000, which would breach the condition on which section 4(3) registration rests.

Frequently Asked Questions

Do I need to register under the Mutual Funds Act or the Private Funds Act?

Whichever the redemption terms dictate. If investors can require the fund to redeem or repurchase their interests before winding up, the fund issues equity interests and registers under the Mutual Funds Act (2025 Revision). If they cannot, it issues investment interests and registers under the Private Funds Act (2025 Revision). Both carry a CIMA annual fee of CI$4,125 / US$5,030.49 as at 1 January 2026, and there is no election.

What is the difference between an open-ended and a closed-ended Cayman fund?

Redeemability at the investor's option, and nothing else. An open-ended fund issues equity interests that the investor can require the fund to redeem before winding up, under section 2 of the Mutual Funds Act (2025 Revision). A closed-ended fund issues investment interests that the investor cannot. Lock-ups, gates and notice periods do not make a fund closed-ended, because they only regulate when the redemption right can be exercised.

What is a limited investor fund, and can I launch with fewer than fifteen investors?

A limited investor fund is a mutual fund registered under section 4(4)(a) of the Mutual Funds Act (2025 Revision). Its equity interests are held by not more than fifteen investors, a majority of whom are capable of appointing or removing the operator. Both limbs are conditions, so fewer than fifteen investors does not by itself qualify a fund. It is a registered fund rather than an exempt one, and the annual fee and the annual audit requirement both apply. If the second limb fails, the fund must instead meet section 4(3) or be administered or licensed.

Is there a minimum investment for a Cayman fund?

Only for a mutual fund registered under section 4(3) of the Mutual Funds Act (2025 Revision). There the minimum aggregate equity interest purchasable by a prospective investor is CI$80,000, unless the interests are listed on a stock exchange specified by CIMA. US$100,000 is market convention rather than statute, because at CIMA's conversion basis of CI$1 = US$1.21951 the statutory figure is US$97,561. Private funds have no statutory minimum.

When does a Cayman fund have to register with CIMA?

A mutual fund must be registered, administered or licensed before it carries on business, so before it issues equity interests, and there is no grace period. A private fund must apply within twenty-one days after accepting capital commitments, under section 5(1)(a) of the Private Funds Act (2025 Revision), and must not accept capital contributions until registered, under section 5(6). Those are two different events and two different obligations.

Do the 2026 tokenised fund rules create a new regime?

No. Part 3B of the Mutual Funds Act, comprising sections 22I and 22J, and sections 19A and 19B of the Private Funds Act took effect on 24 March 2026. They apply to vehicles that are already mutual funds or private funds and have any interests represented by digital equity tokens or digital investment tokens. Tokenisation is a wrapper on an existing regime, so the redeemability question is still answered first. The obligations are additional to the base regime rather than in substitution for it.