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Cayman Islands Directors Registration and Licencing Law, 2014

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Carne Alert – June 2014
Cayman Islands Directors Registration and Licencing Law, 2014
Effective 4 June 2014, the Cayman Islands government has approved the Directors Registration and Licensing Law, 2014 (the “Law”), which requires all directors of mutual funds regulated under the Mutual Funds Law (2013 Revision) and directors of companies registered as ‘excluded persons’ under the Securities and Investment Business Law (2011 Revision) (“Covered Entities”) to register with the Cayman Islands Monetary Authority (“CIMA”) within three months. (Corporate directors have 6 months to be licensed.) Non-compliance with the Law carries with it significant financial penalties and in some cases, imprisonment.

The Law covers ALL directors of Covered Entities, not just those resident in the Cayman Islands. The following categories now apply:

Registered Directors: appointments to less than 20 Covered Entities
Professional Directors – with 20+ Covered Entities (unless exempt – see below)
Corporate Directors – corporate entities acting as directors of Covered Entities

There are two types of exemption whereby Professional Directors will not need to apply for a licence and will instead only have to register, as a result of having sufficient regulatory oversight by other means. Broadly, the first exemption covers the majority of existing Cayman-based directors, and the second exemption covers the majority of ‘connected directors’ i.e. those affiliated with Investment Managers, on the basis that both of these types of directors will be otherwise regulated through their local regulators.

Regulations have been published detailing fees and the information which should be provided to CIMA through their online portal. Registration information is divided into Schedule 1 – less than 20; Schedule 2 – 20+ and otherwise licensed by CIMA; Schedule 3 – 20+ and otherwise regulated overseas eg SEC, FCA. CIMA has also published a FAQs to assist with further information on the process, which is available on their website. Once registered or licensed, any changes to the information submitted to CIMA must be notified to CIMA within 21 days or the director will face a fine of US$25,000.

Directors will be subject to regulation and inspection by CIMA and will be expected to undertake their roles in an appropriate manner, applying sound corporate governance practices with the aim, at a minimum, of complying with the standards detailed in CIMA’s Statement of Guidance issued in January of this year. Further, the Law requires directors to consider their personal capacity before taking on new mandates (although the capacity provisions of the Law are not in force as yet).

Fees

Fees are payable upon application and per annum by 15 January each year.

Registered Director (Schedule 1,2 and 3 types)
CI$700/US$875

Professional Director
CI$3000/US$3,750

Corporate Director
CI$8000/US$10,000

Directors & Officers Insurance (D&O)

Professional and Corporate Directors regulated by the Law will be expected to have D&O insurance in place. This can be a plan they procure themselves, one that is offered by the covered entities they act on, part of a group plan, or any other acceptable insurance coverage. The policy does not have to be written by a Cayman insurer, but must be written by a reputable firm familiar with these types of risks.

Confirmation of registration and licensing

CIMA will publish a list on its website of all registered and licenced directors, including their name, date approved, type of registration or license and number. All other information provided to CIMA as part of the registration and licensing process will be confidential.

Proposed database

As a third limb of the CIMA initiatives to enhance corporate governance standards following the Statement of Guidance and registration process under the new Law, it has been proposed that there might be a more detailed database of director details available to the public. This initiative is still under discussion and is outside the scope of the new Law.

ENDS

For further information, please contact:

Cayman Islands
North America
Europe

John Ackerley
Joe Hardiman
Aymeric Lechartier

T: +1 345 769 9902
T: +1 732 642 5808
T: +44 207 936 9139

john.ackerley@carnegroup.com
joe.hardiman@carnegroup.com
aymeric.lechartier@carnegroup.com

About Carne

Carne is a leading international specialist in the provision of independent governance services and European management company solutions to the global asset management industry. We advise both hedge fund and traditional fund managers on their governance, oversight and management needs, as well as providing independent Directors to the boards of some of the most respected investment funds globally. Carne has fund directors resident in the key fund jurisdictions, including the Cayman Islands, Ireland, Luxembourg, Switzerland, the UK and USA.

www.carnegroup.com http://www.carnegroup.com


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