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.
The Cayman Islands (‘Cayman’) Department for International Tax Cooperation (‘DITC’) has advised that it has published an updated version of its Common Reporting Standard (‘CRS’) Guidance Notes, version V2.1, which supersedes all previous versions. The advice comes in an Industry Advisory dated 1 August 2017 and in an Update to its AEOI Portal Updates and Industry Advisories page dated 31 July 2017, which also advises AEOI Portal users on making late submissions.
In an Industry Advisory (‘Advisory’) dated 19 July 2017, the Cayman Islands (‘Cayman’) Department for International Tax Cooperation (‘DITC’) has extended the final deadlines for Foreign Account Tax Compliance Act (‘FATCA’) and Common Reporting Standard (‘CRS’) 2017 reporting. The Update to the Automatic Exchange of Information (‘AEOI’) Portal (‘Portal’) News and Update page also refers users to the latest 28 June 2017 version of its AEOI Portal User Guide (V3.2.1) (‘Guide’).
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.
In an Industry Advisory dated 23 June 2017, the Cayman Islands (‘Cayman’) Department for International Tax Cooperation (‘DITC’) has advised that before users of its Automatic Exchange of Information (‘AEOI’) Portal (‘Portal’) continue to operate it, they MUST review the latest version of its AEOI Portal User Guide (‘Guide’). The Industry Advisory also advises that the Portal is now back open.
(This updates our earlier piece Cayman AEOI Portal: 2017 Extensions of time for CRS and FATCA and should be read in conjunction with it.)
In an Update posted on 20 June 2017 on the Cayman Islands ('Cayman) Automatic Exchange of Information Portal ('AEOI Portal) the Cayman Department for International Tax Cooperation ('DITC) advised that the AEOI Portal would be offline from 20 June 2017 while it installs the Common Reporting Standard ('CRS) functions. The DITC recommends reviewing here daily from 22nd June for details on when the AEOI Portal will be back up and running. It is expected to return within a few days and users have been asked not to email the AEOI Portal Team about the closure.
New extended 2017 deadline for Notifications
The deadline for new Notification/Registration and Variation of Reporting (Notification) Obligations for US FATCA/CRS has been extended to 31 July 2017. The Update reminds users that ALL Cayman Financial Institutions ('CFIs) MUST register on the AEOI Portal for US FATCA and the CRS or vary their existing US FATCA/UK CDOT registration to add the CRS, even if they have no Reporting obligations.
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.
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  (‘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 
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’).
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.
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