Annual returns are mandatory for exempted companies. They are due in January and the final deadline is the last business day of March (before 5:00 p.m.). Late filings trigger 33.33%, 66.67%, then 100% penalties. After 12 months of non-payment, the company may be struck off.
Regulated funds must meet ongoing CIMA obligations, including filing audited financial statements within 6 months of year-end and submitting a Fund Annual Return (FAR) via REEFS.
The operative laws are Mutual Funds Act (2025 Revision) and Private Funds Act (2025 Revision); private funds must have policies for valuation, safekeeping/title verification, and cash monitoring.
CIMA annual fees for regulated funds are due by 15 January. Penalties accrue at one-twelfth of the annual fee per month if unpaid.
ESN (Economic Substance Notification) is a prerequisite to filing the annual return and follows the Registrar’s annual return timetable (generally by 31 March) via CAP.
Cayman Exempted Companies Operating as Investment Funds
The Cayman Islands remains a leading funds jurisdiction. As at Q4 2024, there were 12,858 registered mutual funds and 17,292 registered private funds (the numbers change quarterly).
Why Exempted Companies Are Often Chosen
An exempted company conducts most of its business outside Cayman and offers flexibility useful for funds. Common advantages include a single shareholder minimum and no statutory minimum capital. Where business is to be carried on in Cayman, proper licensing is required.
Registration Laws for Funds
Open-ended funds register under the Mutual Funds Act (2025 Revision) and closed-ended funds under the Private Funds Act (2025 Revision), both overseen by the Cayman Islands Monetary Authority (CIMA). Typical registration documents include constitutional documents, application forms, structure charts, and required consents, with filings made through Regulatory Enhanced Electronic Forms Submission (REEFS).
Staying Compliant: Annual Return Requirements
Once registered, exempted companies must meet statutory filings with the Registrar of Companies and, if regulated, with CIMA.
How to File Annual Returns
As a Cayman Exempted Company
What: Annual return and government fee. Completing the Economic Substance Notification (ESN) via Corporate Administration Platform (CAP) is a prerequisite before filing.
Where: Registrar of Companies via CAP or the Cayman Business Portal (CBP) — on CBP, the system automatically generates the form from your submission.
When: Due in January; final deadline is the last business day of March.
Air Corporate’s offshore secretary team handles ESN and annual return filings on CAP or CBP, tracking every deadline so your company stays compliant without you needing to log in.
Penalty schedule (Registrar)
| Filing window | Penalty |
|---|---|
| 1 April - 30 June | 33.33% of annual fee |
| 1 July - 30 September | 66.67% of annual fee |
| 1 October - 31 December | 100% of annual fee |
If no filing and payment for 12 months, the company is deemed defunct and may be struck off.
As a Regulated Investment Fund (Mutual or Private)
What:
- Fund Annual Return (FAR)
- Audited financial statements (IFRS or accepted GAAP)
- Operator Declaration (for private funds) addressing valuation, safekeeping/title verification, cash monitoring under the Private Funds Act (2025 Revision)
- FAR filing fee (USD 366 as at 1 Jan 2025; USD183 per AIV/sub-fund)
Where: REEFS (CIMA’s Regulatory Enhanced Electronic Forms Submission portal).
When: Within 6 months after financial year-end (audited financials and FAR); extensions may be granted on request.
Key Functionaries You Must Appoint
- Auditor (CIMA-approved): Required for mutual funds and private funds; audited accounts are filed within 6 months of year-end.
- Administrator: Mandatory only for administered mutual funds which must appoint a CIMA-licensed mutual fund administrator to provide the principal office. For other fund types, administrators are market standard but not universally required by statute.
- Directors / Operators: For regulated funds set up as companies, at least two directors are required. Where a corporate director is used, two natural persons must be named on its board under the Directors Registration and Licensing Act.
(DRLA applies to mutual fund directors; it does not currently apply to private fund directors.)
- Custodian / Safekeeping: Private funds may notify CIMA if appointing a custodian is impractical or disproportionate, but must ensure title verification by a suitable party. Mutual funds commonly appoint custodians although it is not mandated in all cases.
- AML Officers: Appoint MLRO, DMLRO, and AMLCO and follow the Anti-Money Laundering Regulations (2025 Revision).
Ongoing Compliance Obligations (What to Calendar)
- CIMA annual fees: Pay by 15 January each year; late penalties accrue at one-twelfth per month (expressly in MFA 2025 and PFA 2025).
- Audited financials and FAR: File within 6 months after year-end via REEFS; extension up to 3 months may be granted case-by-case.
- Valuation, safekeeping/title verification, cash monitoring (private funds): Maintain policies/appointments per PFA 2025.
- Notify material changes: Within 21 days of material changes to information provided on registration (including offering document updates, service-provider or director changes).
- ESN (Economic Substance Notification): File via CAP by the Registrar’s annual return deadline (generally by 31 March) as a prerequisite to the annual return.
- FATCA/CRS filings (DITC): Registration by 30 April, FATCA and CRS reporting by 31 July, and CRS Compliance Form by 15 September.
Important Notes
- Penalties: CIMA’s Administrative Fines regime allows fines up to KYD 1,000,000 for very serious breaches.
- Extensions: CIMA may grant extensions for audit filings where appropriate; request early and justify the need.
- Platforms: Company filings use CAP or CBP; CIMA filings use REEFS.
Final Thoughts
The Cayman Islands continues to stand out as one of the world’s most reliable offshore jurisdictions. Whether you’re setting up a private equity vehicle, hedge fund, or international holding company, staying compliant with annual returns, CIMA filings, and economic substance rules is essential to keeping your structure in good standing.
Ready to expand offshore with confidence?
Start your Cayman company with Air Corporate today! Our team ensures your entity remains fully compliant under the Companies Act, Mutual Funds Act, and Private Funds Act, while you focus on managing investments and growth.
FAQs
The Registrar applies penalties of 33.33%, 66.67%, and 100% of the annual fee depending on when you file after March, and a company that fails to file and pay for 12 months may be struck off.
On CAP or CBP. On CBP, forms are generated automatically from your submission.
For funds and other CIMA-registered entities, 15 January each year. Penalties accrue monthly if unpaid.
The FAR includes general, operating, and financial information, plus audited financial statements and the Operator Declaration. File via REEFS within 6 months of year-end.
