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.
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:
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 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.
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.
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:
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:
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.
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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.
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.
Cayman Trusts (Amendment) Law 2019 in force from 14th June 2019...
The new Cayman Islands ('Cayman') Trusts (Amendment) Law 2019 (‘Amendment’) will bring...