In a case of interest to those who draft and administer Wills, the England and Wales High Court (‘EWHC’) had to decide whether to accept the natural and ordinary interpretation of the words used in a Will even though everyone concerned agreed it did not reflect the intentions of the person who left the Will (‘the Testator’).  The decision is not binding on the Cayman Islands (‘Cayman’) Courts, but would be considered persuasive authority.

In an email to Industry Stakeholders dated 5 June 2017, the Chief Officer of the Cayman Islands (‘Cayman’) Ministry of Finance (‘Ministry’) reminds those Corporate Services Providers (‘CSP’s) who will be providing Beneficial Ownership Register (‘BOR’s) services for Cayman companies and limited liability companies (‘LLC’s) that they need to have their ‘information technology solution’ (‘IT System’) in place by 1 July 2017. The email is clear that this requirement is not subject to the same grace period as companies and LLCs.

The Cayman Islands (‘Cayman’) is introducing a new non-profit investment vehicle to be known as the Foundation Company (‘FCo’) through the Foundation Companies Law (‘the FCLaw’) which has been passed by the Cayman Legislative Assembly, but is not yet in force.

The United Kingdom Supreme Court (‘UKSC’) has considered whether assets held on trust for a company in liquidation can be available to creditors if the trustee has transferred the assets to a bona fide purchaser for value without notice (‘BFP’). The decision concerned section 127 (‘s.127’) of the UK Insolvency Act (‘the Act’) but it would be considered persuasive authority in the Cayman Islands’ (‘Cayman’) Courts, particularly as the wording of the relevant provision of the UK Act is almost exactly the same as its equivalent in Cayman’s Companies (Amendment) Law (2017) (‘the Law’).

The Registered Land (Amendment) Law (‘the Law’), which comes into force on 1 June 2017, introduces the ability to register volumetric parcels of land and positive covenants into Cayman Islands (‘Cayman’) law. The Law also allows land to be dedicated for public use.

In March 2017, the UK Supreme Court (‘UKSC’) handed down its judgment in a keenly awaited case in which it reinforced the landmark decision of South Australia Asset Management Corpn v. York Montague Ltd [1997] (‘SAAMCO’). The decision clarifies the difference between the legal consequences of a professional advisor giving mis-information versus giving negligent advice. The decision will be of interest to all professional advisors. Although this is a UK decision it would be considered persuasive authority in the Cayman Islands court.

Cases: BPE Solicitors v Hughes-Holland  [2017] UKSC 21; South Australia Asset Management Corpn v. York Montague Ltd [1997]

In an update to its AEOI News and Updates page dated 16 May 2017, the Cayman Islands (‘Cayman’) Department for International Tax Cooperation (‘DITC’) advised that the  Automatic Exchange of Information (‘AEOI’) Portal is online and accepting Foreign Account Tax Compliance Act (‘FATCA’) XML Schema v2.0 returns, Common Reporting Standard (‘CRS’) Notifications and is accepting Variation in Reporting Obligations. The AEOI Portal should be able to accept CRS Returns by the beginning of June 2017.

The Court of Appeal of Guernsey ('GAC') has given leave to a foreign national and resident ('X') to apply for judicial review of the decision to issue a Notice to provide information pursuant to a foreign tax authority's request ('Request') under a Tax Information Exchange Agreement ('TIEA'). As an aside, the GAC also asked whether a system which does not allow taxpayers to be given information to challenge whether a Notice is lawful is missing a vital safeguard.

On 21 April 2017 the Acting Clerk to the Cayman Islands (‘Cayman’) Grand Court (‘Court’) sent a Notice advising that the fees and procedures for Court searches and the fees for photocopies of Court documents would be carried out according to the existing requirements of the Grand Court Rules 1995 (Revised) October 2013 (‘GCR’) and the The Court Fees Rules 2009  (‘CFR’).  The Notice was issued with the approval of the Hon. Chief Justice, along with the Management of Judicial Administration, as it had come to their attention that there had been an unintended and unauthorized departure from the proper practice.

On 13 April 2017 the Cayman Islands (‘Cayman’) Department for International Tax Cooperation (‘DITC’) made announcements regarding various international automatic exchange of information (‘AEOI’) regimes including: the Common Reporting Standard (‘CRS’); the US Foreign Account Tax Compliance Act (‘FATCA’); the UK Crown Dependencies and Overseas Territories (‘UK CDOT’); and the European Union Savings Directive (‘EUSD’).

Key changes

The Announcements are repeated in full below, but the following are the key changes:

CRS Guidance Notes:

There is a new set of Guidance Notes. This is not yet available on the  DITC/Tax Information Authority (‘TIA’) website but is available here.

On 7 April 2017 the Cayman Islands (‘Cayman’) introduced new legislation and regulations requiring all companies and limited liability companies (‘LLCs’) registered in Cayman (and their subsidiaries) to establish and maintain a beneficial ownership register (‘BOR’), unless they are ‘exempted’. The legislation does not apply to Cayman exempted limited partnerships (‘ELPs’).

In an Industry Advisory (‘Advisory’) and update to the AEOI News & Update page dated 7 April 2017, the Cayman Islands (‘Cayman’) Department for International Tax Cooperation (‘DITC’) has advised that the Automatic Exchange of Information (‘AEOI’) Portal will remain offline until at least the beginning of May 2017. There is no push-back of the dates by which Cayman Financial Institutions (‘CFIs’) must comply with their Notification and Reporting deadlines for the Common Reporting Standard (‘CRS’). As before, the DITC recommends checking the AEOI News and Update Page weekly for any further updates.

A recent decision of the Cayman Islands (‘Cayman’) Grand Court (‘Court’) considered how to balance the competing interests of a trust which partly owned an asset and a claimant looking to enforce judgment against that asset. It also reviewed if and when a claimant could appear or make representations when trustees applied for a ‘Beddoe’ Order to indemnify the trustee against all and any costs and expenses which it might properly incur in the process.

The Immigration (Amendment) Regulations 2017 ('Regulations') seek to provide additional clarification on the application process for Permanent Residence ('PR'). It is anticipated that the Caymanian Status and Permanent Residency Board will finally start hearing the 900+ pending PR applications, some of which have been outstanding for 3.5 years since implementation of the new law and points system in October 2013.

The Cayman Islands (‘Cayman’) Department for International Tax Cooperation (‘DITC’) has announced new dates which will allow Cayman Financial Institutions (‘CFIs’) a further two months in which to meet their 2017 Notification and Reporting obligations under the Common Reporting Standard (‘CRS’).

The unexpected reduction of the UK discount rate for calculating future losses in personal injury claims is likely to have serious implications for Cayman Island insurers and personal injury law firms. The UK insurance industry has reacted strongly to the reduction from 2.5% to minus 0.75, effective from 20 March 2017, pointing out that the increased pay-outs will result in higher premiums. Assuming the Cayman Courts apply the pending amendments to the current UK legislation, it is likely the reduction will have a similar effect here in Cayman.

On 22 February 2017 the Cayman Islands (‘Cayman’) Department for International Tax Cooperation (‘DITC’) provided the latest update (‘Update’) to its Automatic Exchange of Information (‘AEOI’)  AEOI News & Updates page. It is still recommending that users review the webpage weekly to check for further Updates on access to and the User Guide for the Cayman AEOI Portal (‘Portal’); IRS Notifications and 2014/15 US Foreign Account Tax Compliance Act (‘FATCA’) Reporting; and Common Reporting Standard (‘CRS’) Notification. The latest Updates cover the same subject matter provided in the DITC’s 7 February 2017 Update, but push back the dates for delivery of access to and functionality of the AEOI Portal.

For those of you looking to invest in property or construction projects in the Cayman Islands, join us at the 3rd RICS Cayman Islands Property and Construction Conference for a day of no-nonsense advice, discussion of industry trends and market outlooks.

Where and when is it happening?

Cayman Marriott Beach Resort, Friday 24 February 2017.

The approach taken by a New Zealand High Court in its decision on how to interpret specific policy exclusions in both a Directors and Officers policy (‘D&O’) and a professional indemnity policy (‘PI’) will be of interest to those providing fund management services and those looking at how a wider commercial context can influence how a contract should be interpreted, and would be persuasive authority for the Cayman Islands Courts.

Advice to check the AEOI News & Updates page weekly was published on 7 February 2017 by the Cayman Islands (‘Cayman’) Department of International Tax Co-operation (‘DITC’). It recommends that the webpage is checked at least once a week for information on re-submission of 2016 US FATCA reporting; access to the Automatic Exchange of Information (‘AEOI’) Portal; US Foreign Account Tax Compliance Act (‘FATCA’) reporting for2014 and 2015; updates to the AEOI Portal for the Common Reporting Standard (‘CRS’) and the forthcoming updated version of the AEOI Portal User Guide.

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