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.
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.
In adding a ‘Second Tranche’of regulations (the ‘2016 Regulations’) to the existing 2015 Regulations for the Common Reporting Standard (‘CRS’), the Cayman Islands (‘Cayman’) Government (‘CIG’) has introduced a new Notification deadline of 30 April 2017 (one month before the Reporting deadline of 31 May 2017) for Cayman Financial Institutions (‘CFIs’) (including a nil return requirement) and Cayman Reporting Financial Institutions (‘CRFIs’). There are fines and criminal offences for default. The CIG is expected to combine both Regulations (the ‘Regulations’) later in the year, but until then they need to be read together. Those with Cayman entities should consider taking professional advice on the effect of the Regulations as soon as possible.
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.
Your new Caribbean winter home
Snowbirds are the fortunate few with the time and money to spend their winter months away from the bustle and cold of a North American winter. Those looking for a safe English-speaking option should consider the advantages of the Cayman Islands, a small Caribbean territory with a stable government, affordable healthcare, no income, capital gains, inheritance or real estate taxes, and just a four hour flight from New York City. Those with a healthy annual income and capital to invest might want to consider their residency options as a Person of Independent Means (see below).
The latest Legal 500 review of Cayman Islands law firms and attorneys has once again recommended Solomon Harris’ attorneys in all five commercial practice areas, staying top ranked in Insurance/Reinsurance, with improved rankings in Corporate and Commercial work, Investment Funds and Real Estate, and a sustained good ranking in Dispute Resolution.
The Legal 500 team researches Cayman legal teams ‘providing the most cutting edge and innovative advice to corporate counsel’ and this year the rankings and research highlight not just our attorneys' knowledge and understanding, but also their responsiveness, innovation and approachability. The results by practice area are:
The Cayman Islands (‘Cayman’) Court of Appeal (‘CICA’) has ruled that the test of whether a company is able to pay its debts (‘the cash flow test’) is not confined to consideration of debts that are immediately due and payable, but also allows consideration of debts that will become due in the reasonably near future. In the same judgment the CICA decided that a decision to pay redemptions in the order in which the redemption requests were made, was a policy to prefer those whose requests were made in December over those whose requests were made in January. As any policy relating to the payment of redemptions means that some redeemers are paid before others, the decision leaves open the possibility that liquidators may claw back any or all redemption payments as preferences. These decisions have binding authority on the Grand Court of the Cayman Islands’ ('Grand Court') approach to whether a company is unable to pay its debts, and whether payments were made with an intention to prefer in claims brought under section 145 of the Cayman Companies Law (2016 revision) (‘the Law’). This is a distinct departure from previous decisions on both these points and will require anyone involved as a director or creditor (including redeemed shareholders) of a Cayman company to re-think they way they deal with payments to creditors. There are a number of other points of interest in the decision but here we concentrate on these two very fundamental shifts in the law.
A Scheme of Arrangement under section 86 of the Cayman Islands (‘Cayman’) Companies Law (2016 Revision) (‘Scheme’) remains a truly useful tool for non-hostile takeovers, mergers and acquisitions. However, many shareholders of a takeover target company (‘the Target’) are daunted by the task of working their way through the weighty document package their company has sent them in the short time allowed before they have to vote for or against the Scheme. Here are ten points to bear in mind whilst reviewing the Scheme documents.
1. What is a Scheme of Arrangement?
In a Scheme where a bid company (‘the Bidder’) wishes to take over the Target, the Bidder and Target agree the terms of the Scheme, which will usually be that the shareholders take cash or shares in exchange for either the cancellation of their shares in the Target or the transfer of those shares to the Bidder.
A September 2016 judgment of the Cayman Islands (‘Cayman’) Grand Court, obtained by Solomon Harris on behalf of Receiver clients, has clarified for the first time that a Cayman segregated portfolio company (‘SPC’) can terminate an individual segregated portfolio (‘Cell’) if the Cell has either no assets, or no liabilities. The decision is a welcome clarification to Directors of how to operate section 228A(1) of the Companies Law (2016 Revision) (‘Companies Law’), and means that Directors of an SPC can pass a resolution to terminate a Cell if it becomes insolvent and has no assets.
On 18 August 2016 the United Kingdom (‘UK’) Government published consultation documents on proposed reforms to the taxation of non-domiciles (see below). They include draft legislation to implement the July 2015 UK Budget proposals to make UK residential Property (‘UKRP’) subject to UK inheritance tax (‘IHT’) where that property is owned by an overseas company (which would include one incorporated in the Cayman Islands (‘Cayman’)).
Real Estate Agents and Property Developers have until 29 May 2019 for AML Registration...
A Special Notice published by the Cayman Islands (‘Cayman’) Department of Commerce and...