Furthermore, any assets of the company, present or future, are deemed to be ‘bona vacantia‘ and vest in the Crown. The strike-off process is undertaken by the directors of the company or the general partner on behalf of a partnership. Creditors and contributories of the company can also apply to the Court for a supervision order if the company is or is likely to become insolvent, or the Court’s supervision will facilitate a more effective, economic or expeditious liquidation in the interests of the creditors and contributories. If a supervision order is made, the liquidation will proceed in the same manner as an official liquidation.
Exempted companies are incorporated under the Companies Act (As Revised) of the Cayman Islands (the “Companies Act“) and are the most common form of Cayman Islands vehicle used when carrying on business mainly outside of the Islands. They offer a flexible and tax-efficient structure for companies to operate in the global market. The main constitutional documents of an exempted company are its memorandum and articles and association that set out the rules for the governance and operation of the company. The issued share capital of an exempted company can be entirely nominal (for example, a single share) and the liability of the shareholders is typically limited to any amounts unpaid on the shares. There are no restrictions on the number of directors or shareholders that an exempted company may have.
Under the AMLRs, RPs are expected to put in place an appropriate effective risk-based independent audit function proportionate to the nature, size, and complexity of their business activities. An AML/CFT Auditor is also expected to be operationally independent of the underlying activities and the related internal control processes. In addition, the AML/CFT periodic audits are expected to assess all RP’s relevant policies, procedures, systems, and controls in line with the regulatory requirements. In Part II, CIMA provides operational control guidance to specifically trust companies, company managers, and corporate service providers in Section A, and more specifically securities investment businesses (of funds) in Section B. These controls offer further guidance for the specialized areas.
Hedge Funds: Streamlining Operations and Ensuring Compliance with Outsourced Administration
Any update in documented policies should be revised to implement considerations of the ruling. It is frequently used as a private equity fund, hedge fund or feeder fund for international investors. The respective rights and obligations of the general partner and limited partners are set Forex Brokers out in an exempted limited partnership agreement. Limited partners benefit from limited liability with all management responsibility vesting in the general partner who is liable for the debts and liabilities of the ELP in the event that the assets of the ELP are inadequate. The new rule and statements guidance apply to all entities that are registered with or licensed by CIMA under all regulatory laws.
The books of account must be such as are necessary to give a true and fair view of the state of the company’s affairs and explain its transactions. The books of account must be retained for a minimum of five years from the date on which they are prepared. A company that knowingly and willfully contravenes these requirements will be subject to a penalty of USD6,100. The books of account need not necessarily be kept at the registered office, but a company must provide to its registered office, annually or with such other frequency and within such time as may be prescribed, information regarding its books of account.
Money Services Business
An ordinary company should be used in the case of a Class A banking licence, as such a company is permitted to carry on local business. An ordinary company must, unless it is licensed under certain other acts (such as the BTC Act), be at least 60% Caymanian owned and controlled or licensed under the Local Companies (Control) Act (Revised). The CIMA manages the Cayman Islands currency, regulates and supervises financial services, provides assistance to overseas regulatory authorities and advises the Cayman Islands government on financial-services regulatory matters. Judiann Myles, 47, had worked some 25 years for the Cayman Islands Monetary Authority, which has had occasion to intersect and work with officials from the Bermuda Monetary Authority as well as other public and private sector professionals in Bermuda’s financial services industries. “Carey Olsen” in the Cayman Islands is the business name of Carey Olsen Cayman Limited, a body corporate recognised under the Legal Practitioners (Incorporated Practice) Regulations (as revised). However, a claimant emerging after dissolution can make an application to restore a company that has been struck off and can potentially pursue the directors personally.
RPs that are part of a group are expected to implement group-wide AML/CFT programmes under the AMLRs. Additionally, RPs are expected to conduct a gap analysis between their group-wide AML/CFT programmes and the Cayman Islands AML/CFT legislative and regulatory requirements to ensure that they, at a minimum, comply with the applicable Cayman Islands requirements. Where gaps are identified during the gap analysis, RPs are expected to address those by making amendments paxful review to their AML/CFT programmes, as appropriate.
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- CIMA may seek reimbursement for reasonable out-of-pocket expenses and related matters with respect to any on-site inspections outside the Cayman Islands.
- The internal audit function should report directly to the governing body and findings communicated to management.
- In particular, the Rule and SoGs relating to Cybersecurity and Outsourcing are not applicable to private funds or regulated mutual funds.
- If used in a private wealth context foundation companies are often incorporated as companies limited by guarantee, which avoids the need for probate to be obtained where shares are issued and one or more shareholders die.
- The amount arising on a capital reduction is treated as a realised profit and, unless otherwise specified, will be credited to the profit and loss reserve of the company.
- The BVI Business Companies (Amendment) Act 2024 (Amendment Act) introduced a number of changes affecting shareholders and beneficial owners as part of the BVI’s effort to maintain its strong reputation for transparency and international best practice and enhance its ability to combat the use of financial services for…
The day-to-day regulatory oversight of the sector falls to CIMA’s Insurance Supervision Division. The Authority continues to expect that all RPs will take note of these findings and act to ensure that their own AML/CFT compliance frameworks meet the standards prescribed and periodically assess their AML/CFT compliance programmes to ensure that they are appropriate for the nature, size, and complexity of their business. Ogier is a professional services firm with the knowledge and expertise to handle the most demanding and complex transactions and provide expert, efficient and cost-effective services to all our clients. To complement the above reporting requirements, it is advisable that arrangements are made for a licensee’s representatives to visit CIMA regularly to discuss the affairs of the licensee.
This will be a new requirement for private funds, whereas the requirement previously applicable to regulated mutual funds was to have at least two meetings per annum. It is imperative that the governing body of a regulated fund engages with the fund’s service providers both at scheduled meetings and on an ongoing basis, and that the meetings are appropriately documented. Implementing the specific rulings along with increased monitoring to ensure compliance is met across all entities under the regulations. These updated laws are meant to protect investors and make sure fund managers are held accountable for implementing a proper corporate governance structure consistently across all entities regulated under CIMA. CIMA, acting through its Banking Supervision Division, has a statutory duty, under the Monetary Authority Act (Revised) to maintain a general review of banking practice in the Cayman Islands and to monitor the business of each licensee.
The Corporate Governance Rule
Of course, CIMA may require information regarding compliance if the fund is subject to some sort of crisis event or serious investor complaint. This set of FAQs is for managers, operators, and owners of investment funds registered or licensed under the Mutual Funds Act or the Private Funds Act. The Authority will continue to promote its supervisory mandate through both offsite monitoring and onsite inspection processes. All FSPs are reminded that any breach of a law, regulation or rule or non-compliance with a statement of guidance may result in an enforcement action. This may also include, or be in addition to, the imposition of an administrative fine for any breach of the AMLRs.
Limited liability Companies
- A thriving, innovative and well-regulated Cayman Islands financial services system and currency that meets applicable international standards and provides value to stakeholders.
- Limited partners benefit from limited liability with all management responsibility vesting in the general partner who is liable for the debts and liabilities of the ELP in the event that the assets of the ELP are inadequate.
- Any update in documented policies should be revised to implement considerations of the ruling.
- Any such direction must be given in the form of a special resolution which can be general in nature, but sufficiently clear and specific to enable the directors to know how they are to act.
- Since 1979 when the Insurance Act was first passed in the Cayman Islands, this jurisdiction has become a major centre for international insurance business.
- It should be noted that these restrictions do not prevent an exempted company effecting and concluding contracts in the Cayman Islands and exercising in the Cayman Islands all of its powers necessary for the carrying on of its business outside the Cayman Islands.
Following the commencement of the POCA revisions, these SAR defenses are now only available to a person who filed a SAR and sought consent from the FRA prior to approving a suspicious transaction or any act which may be potentially a money laundering offence. Regulation 31 of the AMLRs outlines the requirements for record-keeping procedures to be maintained by the RPs. Further, Part II section 8(E) of the AML Guidance notes reiterates that RPs shall ensure that those records will be available to the Authority on request. Regulation 3(2) of the AMLRs and part II sections 2(C), (10) (12) (13) (14) and section 10(C) of the AML Guidance Notes set out the requirements and/or considerations before and/or after placing reliance or outsourcing/delegating the performance of the RP’s compliance function. Based on the Inspections conducted, RPs lacked appropriate policies and procedures as outlined in the Executive Summary. This Circular derives from two sets of data, which have been separated as overall findings per RP inspected, and CDD and risk assessment findings, across files reviewed.
This note provides a summary of the types of banking licences available in the Cayman Islands together with an outline of the initial and on-going licensing requirements. Our sector approach relies on smart collaboration between teams who have a deep understanding of related businesses and industry dynamics. The specific combination of our highly informed experts helps our clients to see around corners. Our commercial understanding and experience of working with leading financial institutions, professional advisers and regulatory bodies means we add real value to clients’ businesses. The shareholders of a company can resolve by ordinary resolution that the company be wound up voluntarily because it is unable to pay its debts as they fall due, or by special resolution that the company be wound up voluntarily.
Where the licensee is a Cayman Islands company, the licensee’s auditor must be a local auditor approved by CIMA. This is the most common Cayman bank licence and permits the holder to carry on offshore banking business with overseas clients (ie non-Cayman Islands residents). Business may be carried on in the Cayman Islands for clients from outside the Cayman Islands.
The SIBA provides for the regulation of the RPs engaged in these activities in or from the Cayman Islands, including market makers, broker-dealers, securities arrangers, securities advisors, and securities managers. Another ruling came out on Oct, 14, 2023, CIMA new Rule and Statement of Guidance on Internal Controls for Regulated Entities went into effect. First published in April 2023, the rule and statement of guidance applies to all CIMA regulated entities. The issue, transfer, dealing or disposal of shares of a licensed bank (and of most other licensees under the regulatory laws of the Cayman Islands) is prohibited without CIMA’s prior approval.This includes a change in direct and indirect beneficial ownership of a licensee.
If the merger transaction will not have a material adverse effect, OfReg is required under URCA to consent to the merger transaction. Stamp duty may be payable in connection with the documentation executed in or thereafter brought within the jurisdiction of the Cayman Islands (perhaps for the purposes of enforcement). In most cases, this duty is of a relatively de minimis fixed amount except in limited circumstances, such as when security is being granted over property in the Cayman Islands.
The Statement of Guidance on Corporate Governance for Mutual Funds and Private Funds replaces the 2013 version, and all funds should ensure that their corporate governance is up to date. Control deficiencies, whether reported internally or through the internal audit function, should be communicated timely to the appropriate parties and a corrective action plan put in place. Management should develop a way of tracking the action plan fxpcm and implementation of updated control procedures if necessary. The Registrar will refuse to incorporate any company whose name includes the words “bank” (or any similar word which in the Registrar’s opinion suggests any such activities) without approval from CIMA(in accordance with section 30 of the Companies Act). In addition, as a general rule, a name will be unacceptable if it is shown to be the same as that used by another bank anywhere in the world, or if it so closely resembles another name as to cause confusion, whether deliberate or not.
CIMA has a regulatory handbook, which includes its policies and procedures for carrying out its regulatory and co-operative functions, and has power, under the Monetary Authority Act (Revised), to issue rules (which are binding on licensees) and statements of guidance (which are not binding, but compliance with which is expected). All banks licensed in the Cayman Islands are also subject to, and required to comply with, the provisions of the Proceeds of Crime Act (Revised), the Anti-Money Laundering Regulations (Revised) and Guidance Notes issued by CIMA in relation thereto. That framework should be, amongst other things, commensurate with the size, complexity, structure, nature of business and risk profile of its operations. Depending on the form the fund takes, these obligations directly apply to the general partner of a limited partnership, the trustee of a unit trust or the board of a company. On Oct.14, 2023, the Cayman Island Monetary Authority’s (CIMA) new Rule on Corporate Governance for Regulated Entities (the ruling) went into effect. First published in April 2023, the Corporate Governance Rule applies to all CIMA regulated entities.