Rathbone Brothers PLC & Anor v Novae Corporate Underwriting Limited & Ors [2014]

A personal trustee working as a consultant for a large trust management company faced claims by beneficiaries that he and his other trustees breached their professional and fiduciary duties by making poor investment decisions. Among the issues raised was whether the excess insurer was only liable after other sources of insurance and indemnity had been exhausted, including the trust company’s £40m contractual indemnity to its consultant (‘Rathbone Indemnity’). The issue concerned a Jersey trust but was heard on appeal by the English Court of Appeal and would be persuasive argument in the Grand Court in the Cayman Islands. Here we look at the arguments raised and the drafting issues that trust management companies should consider for their insurance policies and employee indemnities.

Reporting of Savings Income Information (European Union) Law (2014 Revision)

With the attention given to the introduction of new measures to improve global tax information exchange (‘TIE’) it is easy to forget that Cayman Islands legislation designed to combat tax fraud and ensure transparency has been in effect for some time. The European Union (‘EU’) Savings Tax Directive  (‘Directive’) came into force in 2005, and in March 2014 it was revised to bring it in line with other international initiatives such as the US’s Foreign Account Tax Compliance Act (‘FATCA’) and the OECD’s Common Reporting Standard (‘CRS’). The Cayman Islands (‘Cayman’) was one of the first countries to introduce legislation to implement TIE agreements with EU Member States (‘EU States’) under the 2005 Directive. On 10 October 2014 it updated that legislation to take account of the changes in the Directive with the new Reporting of Savings Income Information (European Union) Law (2014 Revision) (‘ROSII’).

The Cayman Islands Anti-Money Laundering Unit (‘AMLU’) is strongly encouraging private sector responses to its sector-specific National Risk Assessment (‘NRA’) questionnaires before the online survey closes on Tuesday, 30th March 2015. It considers that completion of the anonymous online questionnaires ‘in an honest and timely manner’ is key to ensure the Cayman Islands’(‘Cayman’) Anti- money laundering/Combating the Financing of Terrorism (‘AML/CFT’) regime is able to be robustly reviewed  before the 2017 Caribbean Financial Action Task Force (‘CFTF’) mutual evaluation. The relevant laws, regulations and guidance were last looked at just over 2 years ago and it is particularly important to complete the technical compliance and effectiveness assessment to identify whether there are any issues that require attention so they can be addressed  as soon as possible.

Report from the Cayman Alternative Investment Summit – February 12-13, 2015

 

Solomon Harris partner Richard Addlestone was an Industry Speaker at the the Cayman Alternative Investment Summit, held on February 12-13, 2015 at The Ritz-Carlton, Grand Cayman. Among those attending the alternative investment industry’s introspective and honest conversation about itself were keynote speaker Al Pacino, the award winning actor and director, and special guest speaker Sir Richard Branson founder of Virgin Group.

On 12 February 2015 the Court of Appeal of the Cayman Islands (‘CICA’) produced its judgment on an appeal by two former directors (‘Directors’) of the Weavering Macro Fixed Income Fund Limited (‘Weavering’), a Cayman Islands incorporated hedge fund. The appeal considered whether the Directors’ conduct could be classed as ‘wilful neglect or default’, which would leave them personally liable for a US$111 million award of damages.  Here we look at the appeal and some of the issues it raises for directors’ liability and the standard of care required of a Cayman Islands director.

The decision of the court in the matter of Caledonian Bank (In Voluntary Liquidation) has been published.

A resolution by shareholders of Caledonian Bank and Caledonian Securities to put the companies into voluntary liquidation in an apparent attempt to stymie regulatory action locally has been rejected by the Chief Justice of the Cayman Islands.

Please click here for the full ruling.

Related Articles:

Solomon Harris Represents Caledonian Bank Depositors in Aftermath of SEC Claims

What Control Does a Cayman Controller Have?

The Cayman Islands Monetary Authority (“CIMA”) placed Caledonian Securities Limited and Caledonian Bank Limited into controllership after the U.S. Securities and Exchange Commission (“SEC”)  filed a lawsuit against the bank and its brokerage arm and Clear Water Securities Inc., Legacy Global Markets SA, Verdmont Capital SA in Panama alleging that they offered and sold stocks to investors in the U.S. without the registration required for the shares to be publicly tradable and used a “pump and dump scheme” to sell the shares, thereby fraudulently netting US$75 million, according to the Complaint.

A Cayman Islands Monetary Authority appointed Controller under Securities Investment Business Law (2011 Revision)  and Banks and Trust Companies Law (2013 Revision) such as that appointed for Caledonian Securities Limited and Caledonian Bank Limited has the following powers:

FHR European Ventures LLP and others v. Cedar Capital Partners LLC [2014]

 A recent decision of English Supreme Court (‘the Court’) decided that a principal owns a bribe or secret commission taken by an agent. Although that seems a simple decision, the question has produced inconsistent judicial decisions over the past 200 years, and a great deal of academic controversy. The heart of the issue is whether the bribe or secret commission received by an agent (the ‘Benefit’) is held by the agent on trust for his principal, or whether the principal is the beneficial owner of the Benefit. Here we look at the decision, why it matters, and the significance of the decision for liquidators.

Richard Addlestone – Living with a Regulatory Creep 10:40am-11:20am Friday 13 February 2015

 

Richard Addlestone, Corporate Partner at Cayman Islands law firm Solomon Harris, invites you to hear him speak at this year’s Cayman Alternative Investment Summit on Friday 13 February 2015 from 10.40am to 11.20am at the Ritz-Carlton, Grand Cayman.

Titan Europe 2006-3 plc v. Colliers International UK (in liquidation)

 

A recent decision of the English High Court shows an increasing judicial reluctance to allow parties to avoid liability for negligence simply because the complexity of the structure used by the owners to hold the assets means that it is difficult to identify who can bring a claim. Here we look at how the court addressed the issue of how a non-recourse Special Purpose Vehicle (‘SPV’) could bring a claim when it has not suffered any loss.

The Cayman Islands Government ('CIG') has decided to keep its existing regime for gathering and maintaining legal and beneficial ownership information ('BOI'). Having considered the issue and following consultation with the financial services industry by the Cayman Ministry of Finance, the CIG has issued a report which concludes that it would be premature for the Cayman Islands ('Cayman') to create a new central registry of BOI before global agreement on appropriate exemptions and safeguards, and a central registry becomes the internationally practiced standard. For more than a decade Cayman has used a method endorsed by the global standards body the Financial Action Task Force ('FATF'), by which licensed and regulated corporate service providers ('CSP's) are required to collect, maintain and update BOI.

Introduction

On 16 January 2015 the Cayman Islands Government brought into force Part 4A of the Insurance Law, 2010 and passed the Insurance (Portfolio Insurance Companies) Regulations, 2015, thereby allowing insurers formed as segregated portfolio companies (“SPCs”) to enjoy the same benefits as incorporated cell companies in other jurisdictions.  Cayman’s form of incorporated cell company (“ICC”) legislation is thought to be more robust than other jurisdictions offering ICCs because the model operates squarely within fundamental and well-understood principles of corporate law.

On 29 October the Cayman Islands ('Cayman') was one of fifty one jurisdictions which signed the 'Multilateral Competent Authority Agreement' ('MCAA'). This agreement is part of the process by which the automatic exchange of tax information ('AEOI') under the Organisation for Economic Cooperation and Development ('OECD') and the G20's new Standard for Automatic Exchange of Financial Information in Tax (the 'Standard') will be implemented. The Standard is made up of two parts - the MCAA being the template for the necessary Intergovernmental Agreements ('IGA's) whilst the reporting and due diligence requirements for AEOI are set out in the Common Reporting Standard ('CRS').

Avonwick Holdings Ltd v Webinvest Ltd and another [2014]UK Court of Appeal Unreported

 

Where parties have a genuine dispute which they are genuinely attempting to settle through written or oral communications they can head a document or begin negotiations with the term ‘without prejudice’. That indicates that the content of the document or negotiation is protected from production in court or disclosure to other parties to the dispute. In certain circumstances the protection can apply where the term is not expressly used, but simply putting ‘without prejudice’ at the top of written communications or documents during negotiations will not of itself protect the document from production. This was confirmed by Avonwick Holdings Ltd v Webinvest Ltd and another [2014] (‘Avonwick’), a decision of the English court of appeal but which would be considered persuasive authority in the Cayman Islands (‘Cayman’) Grand Court.

The Grand Court (Amendment) Bill, 2014

 

On 20 October 2014  the Cayman Islands (‘Cayman’) legislature brought into force a Law which gives the Grand Court the power to appoint a receiver or to grant other interim relief (including an interlocutory injunction) in relation to proceedings outside Cayman. The Grand Court now has the power to grant an injunction to freeze assets held in Cayman, even where the substantive proceedings are not based in Cayman.

 

In the matter of the representation of A Limited as trustee of the B Trust, and In the matter of the Trusts (Jersey) Law 1984 as amended [2014] JRC 032

 

A recent Jersey Royal Court decision provides a timely reminder of when it is appropriate for trustees:

(a) to ask for the court’s assistance; and

(b) for the court to give that assistance; and

(c)  when the court’s assistance can help a company owned and run by a trust.

 Although the decision was taken in the Jersey Royal Court (‘the Court’), the principles could be used to form the basis of a similar application in the Grand Court of the Cayman Islands.

Reasons tech companies should consider the Cayman Islands new Special Economic Zone

The new Cayman Enterprise City ('CEC'), based in a new Special Economic Zone ('SEZ'), has been designed to attract knowledge-based industries to the Cayman Islands ('Cayman'). There are potential benefits for multinationals or start-ups to take advantage of the extra concessions being made by the Cayman Government, provided they operate in the fields of internet or information technology; media, marketing and film; biotech and life sciences; commodities and derivatives, education and training; or academia.

If your organization has taken the decision to buy a company registered in the Cayman Islands (‘Cayman’) here is a brief introduction to the overall process and some of the  issues you might like to consider. Buying a Cayman company may form part of a specific investment strategy or a follow a more general strategic review of the global tax advantages which such a move would bring to your organization, but there are potential pitfalls – and you will need specific legal and tax advice before you act.

Martrade Shipping & Transport GmbH v United Enterprises Corporation [2014] EWHC 1884 (Comm) ; Late Payment of Commercial Debts (Interest) Act 1998

The English High Court has looked at the extent to which the United Kingdom's Late Payment of Commercial Debts (Interest) Act 1998 ('the Act') can apply to international contracts which have express provisions that the contract to be governed by English law, and that any disputes be resolved by a London arbitration. The Act can imply a term for a punitive rate of interest of 8% above base rate but there are exceptions to when it can be applied. Here we look at the Act, the exclusions, and the Court's guidance on when the Act can apply to an international contract.

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