Cayman Islands: The Directors Registration And Licensing Law, 2014

The Directors Registration and Licensing Law, 2014 (the "Law") which provides for the regulation of directors of certain entities in the Cayman Islands was published on the 21st of May, 2014. The Law is expected to come into force on such date as may be appointed by order of the Cabinet and may be phased in with different provisions coming into force on different dates.

Who is affected?

Under the Law all directors of regulated mutual funds and of entities which are registered as excluded persons pursuant to paragraphs 1 and 4 of schedule 4 of the Securities Business Law (Revised) (each referred to as "covered entities") will be required to apply to CIMA to be registered or licensed.

Regulated mutual funds are those registered with CIMA under s4(3), or licensed by CIMA under s4(1) of the Mutual Funds Law (Revised) and include registered master funds. Excluded persons under paragraphs 1 and 4 of schedule 4 of the Securities Business Law (Revised) ("SIBL") are Cayman domiciled companies or partnerships or Cayman registered foreign companies (or entities which have established a place of business in Cayman) which provide securities investment business services (i) exclusively to sophisticated persons or high net worth persons or vehicles in which such persons invest or (ii) only on an intra-group basis.

The Law will regulate three categories of director: (i) registered directors, (ii) professional directors and (iii) corporate directors. Registered directors are persons who hold the position of director on less than 20 covered entities. Professional directors are persons who hold 20 or more directorships on covered entities. Corporate Directors are any body corporates appointed to act as a director of a covered entity.

The requirement to register as a director or be licensed as a professional or corporate director of a covered entity (wherever incorporated) applies to both executive and non-executive directors, regardless of whether or not they reside in the Cayman Islands.

Making the Application

Individual directors of covered entities who are acting in that capacity prior to the coming into effect of the Law will not contravene the Law if they continue to so act provided that they are registered or licensed, as applicable, within three months of the Law coming into effect. Corporate directors of covered entities who have acted in that capacity prior to the coming into effect of the Law will have a period of six months of the Law coming into effect in which to obtain their license.

We recommend that applications be submitted as soon as possible after the relevant provisions of the Law come into effect in order to avoid a breach of the Law and we will follow up this briefing with details of the prescribed application forms and the applicable fees as soon as these become available. We are also available to assist in making the relevant application and the appropriate annual filings for directors of covered entities if required.

Persons who have not previously acted as a director to a covered entity and who would like to be appointed as such will need to be registered or licensed, as applicable, prior to their appointment.

Suitability for the role of Director

Individual directors will not be registered or licensed automatically following application. CIMA may refuse to register an applicant if they have information that the applicant has been convicted of a criminal offence involving fraud or dishonesty or is the subject of an adverse finding, financial penalty, sanction or disciplinary action by a regulator, self-regulatory organisation or a professional disciplinary body.

CIMA will not grant a license to a director unless it is satisfied that the applicant has sufficient capacity to carry out the duties of a professional or corporate director, as the case may be, and that the applicant is a fit and proper person for such licensing. To determine whether or not a person is fit and proper, regard shall be had to all the circumstances including that person's (a) honesty, integrity and reputation; (b) competence and capability, and (c) financial soundness. CIMA may grant a license to a professional director or a corporate director with or without conditions attached. Any terms or conditions attached to the license must be adhered to in order to maintain it. The fitness and probity requirements apply not only to corporate directors but also to the members of their board.

Annual Returns and Fees

Once registered or licensed as a director by CIMA, the director must, on or before the 15th of January each year, provide to CIMA such information as is required in the prescribed form and pay to CIMA the prescribed annual fee. A surcharge of one-twelfth of the annual fee is payable by directors who fail to pay the fee for every month or part of every month after the 15th of January in each year that the fee is not paid.

We will follow up this briefing with details of the prescribed annual forms and applicable fees and can assist with annual filings if required.

Change in Information

If there is any change to the information upon which CIMA relied for the registration or licensing of a director, the director must inform CIMA within 21 days of the date of the change.

Certain Professional Directors may only require Registration

For professional directors, there are limited circumstances where registration only is required under the Law as follows:

  • an individual director who is a director, employee, member, officer, partner or shareholder of an investment manager or adviser of a licensed or registered fund where that investment manager or adviser is registered or licensed by an approved regulatory authority1 and that person acts as a director of a covered entity by virtue of their relationship to that fund manager or adviser; and
  • an individual director of a covered entity who is a director, an employee, a member, an officer, a partner or a shareholder of a holder of a companies management license or a mutual fund administrator license issued pursuant to the Companies Management Law (Revised) or to the Mutual Funds Law (Revised).


One of the most significant differences between registered directors and professional or corporate directors is the fact that registered directors are not required to take out a policy of insurance under the Law. Both professional and corporate directors must maintain a policy of insurance with an insurer which is licensed under Cayman's Insurance Law (Revised) or any other insurer acceptable to CIMA to cover loss potentially arising from claims in respect of civil liability incurred in connection with the business of that director. The insurance policy must have minimum aggregate cover of US$1.22m for each and every claim.


Where CIMA refuses to register or license a person who is already a director of a covered entity as at the date of coming into force of the relevant provision of the Law it must provide a written notice and reasons for the refusal. The director may then request a reconsideration of the decision within 14 days which request should include a response to the reasons for the refusal. CIMA must then within 21 days reconsider the refusal and provide the result of that reconsideration and the reasons for it.

Importantly, a refusal shall not be deemed to have taken place unless the reconsideration process has concluded and the decision to refuse registration or to refuse to grant a license has been confirmed by CIMA.

If CIMA cancels or suspends registration, or revokes or suspends the license of a director of a covered entity, that director may appeal against the decision to the Grand Court within twenty one days of the date of the revocation or cancellation, however the appeal shall not act as a stay on the execution of the decision.


1.U. S. Securities and Exchange Commission (SEC); U. S. Commodity Futures Trading Commission (CFTC); U. S. Financial Industry Regulatory Authority (FINRA); Hong Kong Securities and Futures Commission (SFC); Japan Financial Services Agency (FSA); Monetary Authority of Singapore (MAS); U. K. Financial Conduct Authority (FCA); German Federal Financial Supervisory Authority (BaFin); French Authorité des Marchés Financiers (France) (AMF); Netherlands Authority for the Financial Markets (Autoriteit Financiële Markten, AFM); The Central Bank of Ireland (CBI); Luxembourg Commission de Surveillance du Secteur Financier (CSSF); Dubai Financial Services Authority (DFSA); Brazilian Comissão de Valores Mobilários (CVM)

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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