The Cayman Islands Monetary Authority (‘CIMA’) has issued a new Regulatory Policy ‘Net Worth and Liquidity - Trust and Corporate Service Providers’ (‘Policy’) to ensure categories of Licensee maintain a minimum net worth and have adequate assets which are readily available to them. The Policy outlines the criteria against which CIMA will assess liquidity for: Trust Licensees; Restricted Trust Licensees; Companies Management Licensees; and Corporate Services Licensees.

Grand Cayman, CAYMAN ISLANDS, 9 JULY 2018

The partners of Solomon Harris have announced that they will merge with offshore law firm Bedell Cristin.  It is hoped that the deal will complete by the end of August and Solomon Harris will rebrand as Bedell Cristin at a later date.  
Founded in 1998, Solomon Harris is a full service law firm employing 28 people in Grand Cayman.  It has been awarded recognition for its legal expertise across a broad range of services including as a premier firm for captive insurance and investment funds, capital markets, inward/local investment, private client services, corporate/residential real estate, immigration, litigation and insolvency & restructuring.  

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The last year has seen a considerable growth in the international and Cayman Islands (‘Cayman’) market for investments in virtual or ‘crypto’ currencies and Initial Coin Offerings (‘ICOs’). The Cayman Islands Monetary Authority (‘CIMA’) has issued a ‘Public Advisory - Virtual Currencies’ (‘Advisory’)  aimed at helping investors better understand the risks involved. 

The deadline by which those Cayman Islands (‘Cayman’) companies and limited liability companies that are required to provide data on their beneficial ownership to the Beneficial Ownership Competent Authority (‘BOCA’) is Friday 29 June 2018.
Where can I find out more information?
For more information on Cayman Beneficial Ownership legislation see our earlier article  Guidance on Cayman Islands Beneficial Ownership Registration, which gives guidance on the legislation, regulations and exemptions. Further information is also available from Cayman Finance here. Briefly, certain companies and limited liability companies (‘LLCs’) are required under existing Cayman legislation to provide information on their beneficial ownership. All directors of all Cayman companies and LLCs should check whether their company or LLC falls within the scope of the legislation and regulations requiring them to provide Beneficial Ownership data to BOCA. Those who made an assessment before December 2017 should check again to ensure that their company or LLC is not affected by changes which were made to exemptions from the regime. (See also The Cayman Islands Beneficial Ownership Register and why your captive shouldn’t need one.) 

The liquidator of a solvent Cayman Islands (‘Cayman’) company is given the power to adjust the rights of the company’s shareholders under s.112 (‘s.112’) of the Companies Law (2016 Revision) (‘the Law’) (‘the Discretion’). Under Order 12 Rule 2 (‘O2r2’) of the Companies Winding Up Rules, 2008 (‘CWR’) the liquidator ‘shall’ use the Power to rectify the register of shareholders where fraud or default has caused asset values to have been mis-stated at a time when shares have been redeemed (‘Duty’). The issue of when that Discretion becomes a Duty was considered by the Cayman Islands Court of Appeal (‘CICA’) in Primeo Fund (in Official Liquidation) v The Herald Fund SPC (in Official Liquidation) (CICA 5/2017).

By 31 July 2018 all Cayman Islands (‘Cayman’) non-profit organisations (‘NPOs’) which solicit contributions from the public need to register with the Registrar of Non-profit Organisations (‘Registrar’) under the Non-profit Organisations Law, 2017 (‘NPO Law’).

What is the deadline?

The deadline for registration is 31 July 2018, but on 27 April 2018 the Ministry of Financial Services (‘Ministry’) recommended NPOs which are required to register that they need to submit their registration application and accompanying documents by 15 June 2018 in order to ensure the application is processed in time, and advising that those NPOs which register ahead of the deadline would also save the CI$300 application fee. That recommended date has passed, but applications can be completed and filed before the 31 July deadline via the Cayman Business Portal (CBP), the General Registry’s online tool for local businesses.

The Cayman Islands (‘Cayman’) statutory reporting deadline for the Common Reporting Standard (‘CRS’) and US Foreign Account Tax Compliance Act (‘FATCA’) is today, 31 May 2018.
Industry Advisory
The Cayman Department for International Tax Cooperation (‘DITC’) has reminded the financial services industry in an ‘Industry Advisory’ that the Cayman Automatic Exchange of Information (‘AEOI’) Portal (‘Portal’) will be taken offline for various periods during the summer and brought back online to allow Cayman Financial Institutions (‘CFIs’) to comply with their reporting obligations. There is a grace period before which CFIs will attract enforcement measures or penatlties or attract the DITC’s attention for compliance reviews (see below).

On 4 May 2018 the Cayman Islands (‘Cayman’) Ministry of Finance (‘Ministry’) circulated an Industry Advisory informing recipients that the Cayman Department for International Cooperation (‘DITC’)’s Country-by Country Reporting (‘CbCR’) Portal (‘Portal’) is now open. The Portal allows multinational enterprises groups (‘MNE’) to register with (Notify) the Cayman Tax Information Authority (‘TIA’) as and where required by the Tax Information Authority (International Tax Compliance) (Country By-Country Reporting) Regulations, 2017 (‘Regulations’).

New documents and guidance

The Industry Advisory has links to the latest versions of documents (listed below) which must be used instead of earlier versions posted on the DITC’s website. It highlights particular sections of the CbCR Guidance V.1.1 as being of particular help to users: Appendix I: CbCR Notification and Appendix II: The Reporting Procedure on the CbCR Portal.

The anti-money laundering regime (‘AML Regime’) in the Cayman Islands (‘Cayman’) has been updated and its scope widened, introducing a risk-based regime with enhanced due diligence requirements. Here we look at some of the important changes. 

Does the new AML Regime apply to me?
The new AML Regime applies to Cayman domiciled entities (‘Financial Service Providers’ or ‘FSPs’) which conduct ‘relevant financial business ’. That definition has been revised and expanded to include ‘otherwise investing, administering or managing funds or money on behalf of other persons’ and ‘underwriting and placement of life insurance and other investment related insurance’ and now extends to include the following:

  • •    regulated investment funds registered with the Cayman Islands Monetary Authority (‘CIMA’);
  • •    investment funds, both open-ended and closed-ended, which are not registered with CIMA, such as exempted open-ended funds, private equity funds and venture capital funds;
  • •    insurance managers, insurance agents or insurance brokers in relation to long-term business; and
  • •    other entities which conduct ‘relevant financial business’ such as management vehicles (even if registered as an Excluded Person with CIMA), General Partners (‘GPs’) of investment funds and fund trading subsidiaries.

Individuals, private or public entities (‘Organisations’) resident in the Cayman Islands (‘Cayman’) which do not comply with the European Union (‘EU’) General Data Protection Regulation (‘GDPR’) after 25 May 2018 may face heavy fines. Although the legislation is not part of Cayman law, it can apply to companies outside the EU, including Cayman funds with EU investors, and those working with or advising them.

What is the GDPR?

GDPR is a binding legislative act whose provisions become enforceable on 25 May 2018. It applies in its entirety across the EU and in certain circumstances applies to Organisations which are established outside the EU. The aim behind it is to protect EU citizens from improper uses of their personal data, such as privacy or data breaches by Organisations within or outside the EU. It lays down rules to protect natural persons with regard to the processing of their personal data. It goes beyond the Directive it replaces in important aspects:

Where the terms of a contract set out the method and jurisdiction for resolving disputes arising under it, a party which elects to ignore those restrictions may find themselves paying a severe cost penalty. This was the finding of the Cayman Islands (‘Cayman’) Grand Court (‘Court’), which has ordered a fund (‘Argyle’) to pay the costs, assessed on the indemnity basis (see below) of an anti-suit injunction in Cayman brought to prevent Argyle continuing with proceedings in New York against BDO Cayman (‘BDO’) (and others). The Court also ordered that Argyll has to pay damages to BDO of BDO’s costs and expenses of the New York proceedings, also assessed on the indemnity basis. The case is a reminder that the Cayman Court will support parties seeking to enforce jurisdiction and arbitration clauses in contracts.

Legislation is currently in force in the Cayman Islands (‘Cayman’) which requires certain companies and limited liability companies (‘LLCs’) (collectively referred to herein in as ‘Company’) to provide information on their beneficial ownership. Amendments made in December 2017 make changes to exemptions from the regime, which means that Companies which have already assessed whether the legislation applies to them must urgently review that decision. It is suggested that all Directors of all Cayman Companies identify whether their Company falls within the scope of the legislation and regulations set out below (collectively hereinafter referred to as ‘the Law’). Where a Company falls within the scope of the Law, there are obligations already in force that the company must meet to prevent penalty under the Law. The ‘grace period’ in which non-compliant entities will not be prosecuted expires on 30 June 2018.

To view this article in PDF format, click here

Update April 2018  - In an Industry Advisory dated 5 April 2018 the Competent Authority provided a link for a new CD which CSPs will need to use the new file format (Version 1.20) which will take effect as of this April 2018 data submission.. This link gives access to the File Guide, the sample file and the CD Image required to validate and encrypt the new format.

As expected, (here) the Cayman Islands (‘Cayman’) Automatic Exchange of Information (‘AEOI’) Portal (‘Portal’) has re-opened and the Cayman Tax Information Authority (‘TIA’)  has updated its Portal User Guide and Common Reporting Standard (‘CRS)’ Guidance Notes.

The independent law firm guides Legal 500 and Chambers Global have completed their 2018 reviews of Cayman Islands law firms and attorneys based on independent research among specialist professionals and clients. As in previous years Solomon Harris is recommended as a firm and individual attorneys are recognised as specialists in their field.

The Cayman Islands (‘Cayman’) Ministry of Financial Services has issued an Industry Advisory to the effect that all trust and corporate service providers (‘CSPs’) that have not yet submitted information to the centralised platform for beneficial ownership (‘BO’) are required to submit their currently collated information by close of business on 23 February 2018.  Following this filing deadline a new file format will be released in March 2018.

The Cayman Islands (‘Cayman’) Ministry of Finance (‘Ministry’) has published advice on how entities affected by the new Country-by Country Reporting (‘CbCR’) regime (‘Entities’), should prepare for it including information on grace periods in the regime's first year of operation. The advice comes in advance of the Ministry’s formal CbCR Guidance and ahead of the launch by the Cayman Department for International Cooperation (‘DITC’) of the new CbCR Portal (‘Portal’), which is expected in March 2018. For more information on CbCR Reporting generally, see our earlier pieces Application Of The Cayman Islands Country-By-Country Reporting Regulations To Insurance And Captive Insurance Companies and Cayman country-by-country reporting by 31 March 2018 for Multinational Enterprise Groups.

In an Industry Advisory dated 1 February 2018, the Cayman Islands (‘Cayman’) Ministry of Financial Services has advised that the Cayman Automatic Exchange of Information (‘AEOI’) Portal (‘Portal’) will re-open in March 2018. Further, the Cayman Department for International Tax Cooperation (‘DITC’) has published an updated list of Common Reporting Standard (‘CRS’) Participating Jurisdictions and Reportable Jurisdictions. The new list includes Azerbaijan and Pakistan as Participating Jurisdictions. The CRS Guidance Notes are also due to be revised to reflect various changes, as is the Portal User Guide.

As part of the Cayman Islands’ ongoing commitment to international tax transparency, the Tax Information Authority (International Tax Compliance) (Country-By-Country Reporting) Regulations, 2017 (the ‘Regulations’) were issued on 15 December 2017.

The Cayman Islands Grand Court (‘Grand Court’) has made an Order recognising the Joint Receivers (‘Receivers’) of an individual segregated account of a Bermudan segregated accounts company, believed to be the first time such an Order has been made by the Grand Court in respect of receivers of a Bermudan segregated account.

The United Kingdom Court of Appeal (‘UKCA’) has found that once a company has gone into administration (a form of insolvency/restructuring process not available in the Cayman Islands (‘Cayman’)) interest on a creditor's (proven) debt is governed by a statutory regime under s.2.88 of the Insolvency Rules 1986 (‘s.2.88’). The regime provides that in the event that there are still assets left after payment of all the proved debts ('Surplus') at the end of the administration then that Surplus should be used to pay creditors' statutory interest for the period the debt has been outstanding after the commencement of the administration. Although this relates to an administration under UK legislation, the s.2.88 is analogous to the Cayman Companies Winding Up Rules (‘CWR’) Order 16 rules 11 and 12, and this UKCA decision would be considered persuasive authority in Cayman courts as to the treatment of interest in a liquidation.

Case: Burlington Loan Management Ltd & Ors v Lomas & Ors [2017] EWCA Civ 1462

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New CIMA Regulatory Policy assets and liquidity for Trusts and corporate services providers...

The Cayman Islands Monetary Authority (‘CIMA’) has issued a new Regulatory Policy ‘N...


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