On 2 August 2017 the Cayman Islands (‘Cayman’) Information Commissioner’s Office (‘ICO’) indicated that the Cayman Government’s Data Protection Law 2017 (‘the Law’) is expected to come into effect in January 2019 (see here). IMPORTANT UPDATE - In November 2018 this was formally put back until September 2019 - see Cayman Data Protection regime will now start in September 2019.
Once that happens the Law will affect any individual or organisation established in Cayman which processes personal data, even where that data is being processed outside Cayman. Although the Law was passed on 17 March and was published in the Cayman Gazette on 5 June 2017 it is not yet in force, allowing those affected time to prepare. Here we look at some of the Law’s provisions (including the corporate finance exemption) and suggest some steps you should consider taking if the Law is likely to affect you or your organisation.
The Privy Council (‘PC’), the ultimate Court of Appeal for the Cayman Islands (‘Cayman’), has confirmed that redemption of shares occurs when a shareholder ceases to be a shareholder, even if they have not yet been paid for the shares they have redeemed. This has determined the interpretation of s.37(7)(a) of the Companies Law (2016 Revision) (the ‘Law’). Although they were not asked to decide the matter as part of their judgment, the PC also commented on where these creditors rank for payment.
There is no taxation on income, profits or capital gains in the Cayman Islands (‘Cayman’), but for those who want a cast-iron guarantee that their entity will not be subject to those taxes in the future, Cayman also offers an undertaking from the Governor in Cabinet that those taxes will not be imposed on the company for a period of 20 years (extendable by a further 10 years) for most entities and 30 (or 50 on request) for new Limited Liability Companies (‘LLCs’). That undertaking is known as a Tax Exemption Certificate (‘Certificate’), and the turn-around time for an application is about two to three weeks. The Cayman Cabinet Office is currently trialing a new e-service for these applications which should cut that time to two to three days for normal applications, and faster for expedited applications.
Where someone dies in a foreign country and leaves assets in the Cayman Islands (‘Cayman’), no-one can take possession of or in any way administer any part of the deceased’s Cayman estate without a grant of representation (‘Cayman Grant’) from the Cayman Court. Where the deceased is a non-resident it is often possible to get recognition in Cayman for the instrument of probate granted by the court of probate of that foreign country (‘the Foreign Grant’), provided that it has the same effect in the foreign country as a grant of probate/letters of administration would have under Cayman law. The simplest and cheapest option will be to get the Foreign Grant re-sealed in the Cayman Court so that the Representative or Representatives appointed by the Foreign Grant can deal with the Cayman assets as well as the assets in the foreign jurisdiction.
Who is affected by the National Pension (Amendment) Law 2016 (‘the Law’)?
The Law and the Normal Age of Pension Entitlement Option Order (‘NAPEO’) NAPEO affect pension plans (‘Pension Plans’) established and maintained by a pension provider regulated by the Cayman Islands Monetary Authority for the benefit of employees (‘Employees’) in the Cayman Islands (‘Cayman’). Those who work for the Cayman government contribute to the Public Service Pension Fund (‘PSPF’) and information on the PSPF and the Public Service Pensions Law (2017 Revision) (‘PSPLaw’) is in the relevant sections below.
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.
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  (‘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  UKSC 21; South Australia Asset Management Corpn v. York Montague Ltd 
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 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’).
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 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.
The Cayman Islands (‘Cayman’) is set to introduce a new entity ideally suited to professionals looking for the flexibility of a traditional partnership, but with the protection of a separate corporate identity – the Limited Liability Partnership (‘LLP’). As well as benefitting those who do business in Cayman, the legislation is drafted widely enough to allow the use of Cayman LLPs internationally.
When will this happen?
The Limited Liability Partnerships Bill 2017 was Gazetted on 31 January 2017 and it is expected to be passed by the Cayman Legislative Assembly later this month, parliamentary time permitting.
A recent Northern Ireland Court of Appeal (‘Court’) decision, which would be considered persuasive authority here in the Cayman Islands (‘Cayman’), looked at whether a view, specifically a ‘view of the sea’, can be protected. The case looked at the interpretation of covenants generally, including the interpretation of being unreasonable when enforcing a covenant. At stake was the loss of all or part of a sea view. The case will be of interest to anyone looking to enforce or interpret either a covenant over land, to protect their view or interpreting conflicting terms in a contract.
The England and Wales High Court (‘Court’) has found that notes prepared by in house and external attorneys as part of a contract review were not automatically privileged from disclosure in subsequent litigation. The case ('Astex') serves as a reminder that privilege cannot be claimed automatically simply because a document has been prepared by an attorney, and that once again advice should be sought at an early stage on whether a document or class of documents is or will be privileged. The decision in Astex (and in RBS where Astex was applied) would be persuasive authority in the Cayman Islands (‘Cayman’).
The Cayman Islands Monetary Authority (‘CIMA’) has made changes to its notification process for Fund Annual Return (‘FAR’) fees and is continuing to roll out its Regulatory Enhanced Electronic Forms Submission (‘REEFS’). Details were given in a CIMA Notice dated 16 December 2016 and updated on 19 December 2016.
The Cayman Islands (‘Cayman’) the National Pension (Amendment) Law 2016 (‘Amended Law’) will come into force on 31 December 2016, although key changes will come into effect in the first three months of 2017, to allow preparation of the necessary regulations. The related Normal Age of Pension Entitlement Option Order (‘NAPEO’) will come into effect as of 1 January 2017.
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