Cayman Islands: Increased Fund Governance And Regulation Keeps Cayman At The Forefront – Hedgeweek

Last Updated: 17 February 2016
Article by Don W. Ebanks

DMS Managing Director Don W. Ebanks discusses topical governance issues in an interview with Hedgeweek for its special report, Cayman Islands Hedge Fund Services 2016.

With the Directors Registration & Licensing Law now up and running, CIMA is placing more emphasis on supervising directors to Cayman funds. Do you think it is a good idea to have such a register in place?

DWE: I think it is correct that there is more emphasis on regulating directors. The Directors Registration & Licensing Law ("DRLL") creates a framework for authorization (registration or licensing) of hedge fund directors and adds enforcement tools to those which already exist in the Mutual Funds Law (which governs hedge funds in Cayman). For example Section 30(3) (c) of the Mutual Funds Law gives CIMA the power to require the substitution of any director of a regulated fund. The DRLL goes further and provides for, inter alia, the effective disqualification of hedge fund directors through Section 25(2). The register maintained by CIMA under the DRLL, which includes contact details, is a useful tool as the law does place an obligation on the registered or licensed director to keep those details current. This is an important provision for the regulator (and investors) when funds are in any type of distressed situation and communication with all directors is essential.

HW: Are you detecting changes in the ways that fund managers approach their corporate governance requirements? Are you seeing, for example, increased use of independent directors from DMS, and other directorship firms, as appointments to split boards?

The use of independent directors has become the norm, which has increased demand across the board, but a majority of independent directors on offshore fund boards is not yet universal. An independent majority is something that institutional investors typically look for and I have seen voting shares being held in trust arrangements more often in the last few years. Split boards are certainly used a bit more very recently, but the important question seems to be the overall board composition and function, which is addressed in the CIMA Statement of Guidance ("SoG") for funds and below.

What are some of the key advantages that DMS can offer to fund managers, in terms of the depth and breadth of expertise that its directors can bring to bear for hedge funds?

DWE: DMS has, over more than a decade, built a proven and successful professional Fund Governance firm that has expanded to seven jurisdictions around the world, offering both onshore and offshore directorship services. Our directors also draw on our specialist teams in areas such as AIFMD and FATCA/International Tax Compliance to satisfy their fiduciary duties and add value in an increasingly complex environment. During 2015, DMS added a number of U.S.-based independent directors to its established team of directors in Cayman, Ireland and Luxembourg. The new members of our team come from diverse backgrounds including serving as a COO of large hedge funds and leading Operational Due Diligence teams for alternative investments at major global banks.

Our directorship solutions combine market-leading expertise with state-of-the-art technology and compliance with SEC fund governance standards. In addition, we provide fund stakeholders with transparency and accountability with unique reporting systems, such as our Fund Governance Transparency ReportSM, which shows the governance "touch points" in a specified period, and Independent Directors' ReportSM ("IDR"). The IDR provides confirmations regarding issues of concern to prospective investors (e.g. no material litigation or regulatory issues) from an independent source.

How would assess 2015? Have you seen increased demand for our services compared to 2014?

DWE: 2015 has been similar to 2014 with a substantial amount of attention being given to regulatory issues such as OECD CRS, but last year was about seeing the light at the end of the tunnel. We haven't dealt with all the issues yet, but things appear to have "settled down" a bit and we can focus more on implementation and oversight rather than absorbing entirely new demands on the governance process. Managers do appear to appreciate the input that a well informed and experienced director can provide in these areas. We have certainly seen increased demand for governance services, especially in areas where we are offering new solutions.

How important is it for fund managers to appoint directors that collectively bring a wide range of complimentary skill sets to the table?

This is one of the most important issues to consider. Does it make sense to have two independent directors with nearly identical CVs, even if they're from different firms? I tend to think of governance in terms of maritime navigation, you need to know where the reefs and shallows are to avoid sinking. A board with diverse skills and experience can most effectively map out the challenges, which can also be rapidly evolving, in order act in the best interests of investors. Directors may wish to lean on, for example, legal counsel, but what use are professional advisors to the board if you don't know the questions to ask? The CIMA SoG also requires fund boards to consider their overall effectiveness, which includes collective expertise.

There are an increasing number of independent directorship services opening up in Cayman (e.g.Crestbridge most recently). Do you welcome the increased competition?

Absolutely. It's a large market and we're proud to be the largest provider in the Fund Governance space, but size isn't enough. Your scale should be used to implement solutions and this can be seen in our best in class AIFMD / risk reporting and speed to market on FATCA where we were at the cutting edge of raising awareness. As noted above, varying skills on a board are very useful and I hope that the new firms are diligent about this in the hiring process otherwise we will not actually increase diversity in the industry.

Finally, how is regulation such as AIFMD impacting board meetings? Is it taking up moretime and what, in your view, are the most important regulatory issues that directors need to keep on top of currently?

Increased regulation is the "new normal" and at least in our experience is fairly bedded in at this point. Board agendas are updated and you spend more time focused on those issues, but it's not a dramatic change. AIFMD is one of the most important as improper marketing to EU investors can come with significant penalties. One issue that I saw last year was a quarterly market update for one fund that mentioned the manager's new fund with a short description of the strategy. I immediately checked if there were any EU investors and raised the issue with the manager noting that such information may be considered marketing under AIFMD and should be removed. Directors don't have to be experts on every issue, but having a basic awareness is essential as we are ultimately responsible for regulatory compliance.

Read the full report.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Carne Global Financial Services Limited
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Carne Global Financial Services Limited
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions