In this series. This note separates the seats. Whether investors can redeem is open-ended versus closed-ended. Where the assets sit is feeder versus parallel. What a redemption clause actually pays, and when, is liquidity terms. The practice page is Cayman funds.

Term sheets collapse three different jobs into one word, “manager.” Someone has to operate the Cayman vehicle. Someone has to make the investment decisions. Someone has to keep the valuations, the accounts, and the investor records. Those jobs can be contracted to overlapping people. They are not the same job, and the Cayman statutes do not treat them as the same job.

The operator follows the legal form

Both the Mutual Funds Act (2025 Revision) and the Private Funds Act (2025 Revision) define the operator by the form of the vehicle. For a unit trust, the operator is a trustee. For a partnership, the operator is a general partner. For a company, the operator is a director. Under the Private Funds Act, the operator of a limited liability company is a manager of that company — a different use of the word “manager” from the investment manager described below.

An exempted limited partnership used as a fund is therefore operated by its general partner. A corporate fund is operated by its board. The company does not acquire a general partner merely because it is a fund, and the partnership does not acquire a board of directors in place of its general partner merely because the strategy is open-ended. Which form is used for which strategy is a convention, discussed in Open-Ended vs. Closed-Ended Cayman Funds. It is not a rule that a company must be open-ended or a partnership must be closed-ended.

Under the Private Funds Act, the operator is responsible for the private fund’s compliance with that Act. Delegation of a task does not remove the question of who still has to oversee it. The constitutional documents and the service contracts should say, in plain terms, who may bind the vehicle, who may suspend dealings or make a capital call, and who must be told when a delegate is outside the mandate.

The investment manager is a different person in the statute

The Private Funds Act defines “manager” as a person who is not an operator of the private fund and who is responsible for the management of some or all of the investments held for or within the fund. The investment-management agreement is where that mandate is written: what may be bought, what leverage is permitted, what must be referred back, and what is reported. The general partner’s role in operating the partnership should not be casually equated with the manager’s role in selecting investments. One person or one entity can wear both hats. The documents should still say which hat is which.

On a U.S. fund, the same separation — a general partner that operates the partnership, and a management company that employs the investment team — is discussed in GP Entity and Management Company and in The GP/LP Fund Structure. Those notes are about U.S. vehicles. They are useful company-planning reading. They are not a description of Cayman law.

Locating the investment manager outside the Cayman Islands does not, by itself, answer every licensing question. The Mutual Funds Act and the Private Funds Act both refer to the Securities Investment Business Act for a narrow route: a fund that is not established in the Islands and that invites the public in the Islands to subscribe through a person licensed under that Act, for a regulated activity the Authority specifies, and that meets a listing or overseas-regulation condition. That cross-reference is not an exemption for the investment manager. Whether a person is carrying on securities investment business, and whether any exemption actually applies, depends on the activities and where they are carried on. It is not decided by the manager’s mailing address, by the fund’s CIMA registration, or by a U.S. adviser exemption. That review belongs with qualified Cayman counsel. We do not treat any exemption as automatic.

A separate U.S. question remains. A person in the United States managing the portfolio, or holding out in the United States, can have an Advisers Act registration or exemption analysis that Cayman registration does not answer. We advise on that U.S. position as part of the fund documents. We do not practice Cayman law, and we are not the fund’s Cayman counsel.

Administration is a third function

An administrator’s usual commercial work is valuation support, accounting, and the investor register: processing subscriptions and redemptions, keeping the records, and producing the statements investors actually read. That work is not the investment decision. It is also not, by itself, the operator’s duty to run the vehicle.

The Mutual Funds Act uses “mutual fund administration” more broadly. It includes managing the fund, including control of all or substantially all of its assets, administering the fund, providing its principal office in the Islands, or providing an operator, with stated exclusions. A person who provides those services as a business is in the licensing regime for mutual fund administrators. An administered fund under section 4(1)(b) is the regulatory category in which a licensed administrator provides the fund’s principal office. That category is one of the registration routes discussed in the exit-rights note. Hiring an administrator for a transfer agency does not, by itself, make the fund an administered fund, and it does not move the investment discretion from the manager to the administrator.

CIMA’s FAQ addresses two governance points for private funds specifically, and they should be read as the Authority’s stated position rather than as a complete companies-law treatise. The FAQ says the four-eyes principle applies to a private fund, and that a minimum of two directors are required for applicants that are companies. It also says CIMA will require a minimum of two natural persons to be named in respect of a general partner or a corporate director of a private fund. Those are registration expectations to plan for with Cayman counsel. They do not tell you who, inside that group, may approve a deal.

The same FAQ says a private fund may conduct cash monitoring internally, by the investment manager, or through a third-party service provider. If the function stays internal, the FAQ says the operator should engage the auditor, when the audited financial statements are signed, to confirm that cash monitoring was done through the year. Valuation is separate again. The FAQ describes section 16 of the Private Funds Act as requiring valuation in accordance with the fund’s valuation policy, at least annually, even where investors have no right to redeem and have not asked for a valuation. An annual valuation for a closed-ended fund is a regulatory and reporting discipline. It is not a redemption right. How valuation interacts with a dealing day, when redemptions do exist, is covered in liquidity terms.

What the documents should name before the first subscription

  1. The operator, and the natural persons who direct a corporate general partner or a corporate fund.
  2. The investment manager, the mandate, and what must be taken back to the operator.
  3. The administrator, the auditor, and who values the assets.
  4. Who monitors cash, and who confirms that monitoring if it is done in-house.
  5. Who instructs Cayman counsel on the CIMA application, and who is responsible for U.S. offering and adviser filings.

If those five lines cannot be written, the structure is still a diagram. Recalde Law prepares the U.S. fund documents that have to match this allocation, and coordinates with qualified Cayman counsel on the Cayman vehicle, the Cayman advice, and the registration. The place to start that conversation is the Cayman funds page. U.S. vehicles that are not Cayman are on Fund Formation.

Official references