Those looking to benefit from the favourable stamp duty treatment facilitated by developers who offer property in the Cayman Islands as part of a land purchase and development contract package will need to act quickly if they want to beat the changes proposed in The Stamp Duty (Amendment) Bill 2018 (‘Bill’). To take advantage of the current arrangements you will need to enter into these contracts by no later than 31 December 2018. Developers who have previously sought to utilise the current law as part of their offering to potential buyers will also need to take note of the proposed changes.

UPDATE: When the Bill became The Stamp Duty (Amendment) Law, 2018, there was a significant alteration in wording which allows developers with planning permission in place by 30 June 2019 to have a year to take advantage of the pre-existing regime for stamp duty on ‘linked property transactions’, provided they enter into their contracts before 31 December 2019. For more information, including what constitutes a linked property transaction, please see our piece Welcome delay in change to Cayman Islands Stamp Duty law gives developers another year before Stamp Duty increase. For the current position on stamp duty and linked property transactions see our piece: What is the new stamp duty position on linked transactions?

The Cayman Islands (‘Cayman’) Government has published in the Cayman Gazette eighteen new bills with proposals for new legislative measures. Some are to address criminal measures such as stalking and gambling, others such as those on Stamp Duty will be of general interest and there are five proposals which affect regulation of non-profits, banking groups, disclosure of beneficial ownership information and its exchange with other jurisdictions for limited liability partnerships. We will cover several of these new Bills in detail in later pieces, but for the moment these are the proposed changes in summary.

On 19 October the Financial Action Task Force (‘FATF’) published its revised Recommendations for international standards on combating money laundering and the financing of terrorism and proliferation. The revision amends FATF's Recommendation on New Technologies (Regulation 15) and adds two new definitions to the Glossary: ‘Virtual Assets’ and ‘Virtual Asset Service Provider’. FATF’s definition of 'Virtual Assets' in the standard covers virtual currencies, but also extends to cover the fact that anything can be tokenized as an asset and transferred on a blockchain or other digital peer to peer format. The standard also covers virtual asset service providers, i.e. a crypto currency exchange.

At the beginning of October 2018 the European Securities Management Authority (‘ESMA’) published several new Question and Answer (‘Q&A’) documents which will be of interest to those in the funds industry.

The Cayman Islands Court of Appeal (‘CICA’) has allowed a Cayman Islands (‘Cayman’) mutual fund to bring claims in the New York courts for gross negligence and fraud against three entities (‘the Affiliates’) affiliated with Argyle’s Cayman auditors (‘BDO’). This was despite express contractual terms of engagement of BDO restricting dispute resolution to mediation or arbitration and a clause giving Cayman courts exclusive jurisdiction.

The Cayman Islands Monetary Authority (‘CIMA’) has published a new Regulatory Policy - Licensing Mutual Fund Administrators (‘the Policy’) which sets out the criteria CIMA will apply in licensing mutual fund administrators.
When does the Policy apply?
The Policy states that CIMA must give prior approval to anyone wanting to conduct Mutual Fund Administration (‘MFA’) in or from within the Cayman Islands (‘Cayman’). The Policy sets out how CIMA will assess those who apply to do so, although it will also apply: the Mutual Fund Administrators Licence (Applications) Regulations 2001 (the ‘Regulations’); the Anti-Money Laundering Regulations (2017 Revision) (‘AML Regulations’); the Guidance Notes on the Prevention and Detection of Money Laundering and Terrorist Financing in the Cayman Islands (the ‘AML Guidance Notes’); and any other law, policy or statement of guidance which is relevant to the application.

Before the new Cayman Islands (‘Cayman’) Beneficial Ownership Register (‘BOR’) went live, the Cayman Islands Government (‘CIG’) completed a security enhancement and had the air-gapped platform independently evaluated to check for any deficiencies. The result was circulated in an Industry Advisory dated 9 October 2018, confirming that the non-public beneficial ownership platform (‘BOP’) was assessed as secure, with no deficiencies in the air-gapped system.

In a notification dated 24 September 2018 the Cayman Islands Monetary Authority (‘CIMA’) has extended the deadline set for regulated funds to notify it of the appointment of Anti-Money Laundering Officers (‘AML Officers’) from 30 September 2018 to 31 December 2018. This extension applies to the notification requirement only and regulated funds must still appoint their AML Officers by 30 September 2018.

In a hearing of four Preliminary Issues in the Cayman Islands (‘Cayman’) Grand Court (‘Court’) it was decided that a former director of Tangerine Asset Management Ltd (‘TAM’) was able to rely on indemnity provisions in TAM’s Articles of Association (‘Articles’). The terms of indemnity also covered her legal costs in defending the current claim, brought by an assignee of the rights of TAM, that the director breached her common law duties and/or her fiduciary duties to the company, which is now in liquidation. Here we look at the lessons for directors on the ability to rely on indemnities in the Articles of the company to which they are appointed. In a later piece we will consider the Court’s finding that she did not have to wait until the end of the case to have her legal fees paid but was entitled to have them paid as they were incurred.

The England and Wales Court of Appeal (‘EWCA’) has decided that litigation privilege (‘LP’) does protect documents prepared by attorneys in anticipation of an investigation by a regulator (in particular interviews between attorneys and the company’s employees). It also considered the application of legal advice privilege (‘LAP’) to interviews with ex-employees and considered the earlier decision in ‘Three Rivers No. 5’ and whether that decision should be reviewed by the Supreme Court. The decision of the EWCA would be persuasive authority in the Cayman Islands (‘Cayman’).

In the Cayman Islands (‘Cayman’) under section 107 of the Companies Law (2018 Revision) (‘Companies Law’) an Official Liquidator (‘OL’) may be removed from office by order of the Grand Court (‘Court’) made on the application of a creditor or shareholder of the company.

The Cayman Islands (‘Cayman’) Department for International Tax Cooperation (‘DITC’) has issued an Industry Advisory to remind the financial services industry of the deadline for Constituent Entities (‘CE’s) in Cayman to make Country-by-Country Reporting (‘CbCR’) notifications for Multinational Enterprise (‘MNE’) Groups that have a fiscal year which began on or after 1 January 2016, and ended on or before 30 September 2018, if the MNE Group’s Reporting Entity is not resident in Cayman.

The Cayman Islands (‘Cayman’) has published in the Gazette the Immigration (Amendment) Law, 2018 (‘Amendment Law’), which is aimed at addressing issues with residency. In particular the Law addresses the right to be Caymanian; specialist caregivers; and includes provisions to establish a Refugee Protection Appeals Tribunal (‘Tribunal’). The provisions relating to the Tribunal will come into force at a date which has yet to be fixed.

Applications for the right to be Caymanian

The Amendment Law removes the limitations on certain individuals whose immigration status in Cayman has been uncertain for a number of years, the so-called ‘ghost-Caymanians’. These are people who were born or brought up in Cayman to non-Caymanian parents and who have found that they do not have Caymanian status once they reach 18. The Amendment Law removes the following deadlines on applying for Caymanian status:

In the Cayman Islands (‘Cayman’) when the Grand Court (‘Court’) appoints an Official Liquidator (‘OL’) to a company it gives it powers based on those set out in Schedule 3 ‘Powers of Liquidators’ to the Companies Law (2018 Revision) (‘Companies Law’). The OL will be able to exercise some powers without asking the Court to ‘sanction’ their actions, but other powers, those set out in Part I of Schedule 3 of the Companies Law, will always need the OL to apply to Court for sanction. In any circumstance where a creditor or shareholder is aggrieved by action or inaction by an OL they can apply to the Court for an order directing the OL to exercise or refrain from exercising any of their powers in a particular way. Such application is called a Sanction Application. The process for making such an application is set out in the Companies Winding Up Rules 2018 (‘CWR’), Order 11.

The Cayman Islands (‘Cayman’) has seen considerable growth in recent years in investment vehicles for crypto-assets. The Cayman Islands Government has not yet published specific legislation or regulation on crypto-asset investment funds, but other international organisations are considering global standards which should apply. In a communique at the end of its July 2018 meeting in Buenos Aires the G20 Finance Ministers and Central Bank Governors (‘G20’) asked the Financial Action Task Force (‘FATF’) to clarify, in October 2018, how its standards apply to crypto-assets. At the same meeting the Financial Stability Board (‘FSB’) explained in a report to the G20
that whilst crypto assets do not pose a material risk to global financial stability at the moment, given the speed at which the market for them is developing it needs “vigilant monitoring”. Working with the Committee on Payments and Market Infrastructures (‘CPMI’) the FSB has set out a framework to monitor the financial stability implications of developments in crypto-asset markets.

In the Cayman Islands (‘Cayman’) an Official Liquidator (‘OL’) is appointed to a company under section 105 of the Companies Law (2018 Revision)(‘Companies Law’). The Cayman Grand Court (‘Court’) may appoint such person as it seeks fit to be the OL of a company to assist it in winding up a company and to conduct the winding up proceedings. As well as powers granted to an OL, considered here,the OL has specific duties.

On 30 July 2018 the Cayman Islands (‘Cayman’) Grand Court (‘Court’) issued a new practice direction (‘PD’) No: 1 of 2018 which provides that those involved in cross-border insolvency cases should consider as soon as possible whether to incorporate some or all of existing guidelines into an international protocol to be approved by the Court or an Order of the Court adopting the guidelines.

What are the existing guidelines?

The two guidelines for court-to-court communications and co-operation attached to the PD and referred to in the PD itself which the Court considers might be adopted in Cayman (with appropriate modifications) are the:

  1. 1.       American Law Institute/International Insolvency Institute Guidelines Applicable to Court-to-Court Communications in Cross-Border Cases (May 16 2000) (see here for an example);and
  2. 2.      The Judicial Insolvency Network Guidelines for Communication and Cooperation between Courts in Cross-Border Insolvency Matters (see here for an example).

In the Cayman Islands (‘Cayman’) an Official Liquidator (‘OL’) is appointed to a company and given powers by the Grand Court (‘Court’) in accordance with Cayman legislation. Under section 105 of the Companies Law (2018 Revision)(‘Companies Law’) the Court may appoint such person as it sees fit to be the OL of a company. Under section 108(2) of the Companies Law an OL is an officer of the Court whose role is to “wind up” a company’s business. In the first of a series of articles we take a brief look at the powers of OLs, and subsequent articles will consider their duties, how to challenge decisions made by OLs and how they can be removed.

In a Notice dated 19 July 2018, the Cayman Islands Monetary Authority (‘CIMA’) has given its answers to frequently asked questions (‘FAQs’) on its Guidance Notes on the Prevention and Detection of Money Laundering in the Cayman Islands (‘Cayman’) that relate to Anti-Money Laundering Regulations (‘AMLRs’) and funds. Below is a summary of the main points, but the FAQs should be available on the CIMA website in due course.

The Cayman Islands (‘Cayman’) Department for International Tax Cooperation (‘DITC’) has updated its AEOI Portal updates and Industry Advisories (‘AEOI Update’) page to remind users of the Cayman Automatic Exchange of Information (‘AEOI’) Portal (‘Portal’) and Country by Country Reporting (‘CbCR’) Portal (‘CbCR Portal’) that they are both open and to update on dates by which Cayman Financial Institutions (‘CFIs’) need to comply with their reporting and notification obligations. The Updates only appear on the AEOI Update page which users should check on a regular basis.


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Real Estate Agents and Property Developers have until 29 May 2019 for AML Registration...

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