Cayman Islands: Director Registration And Licensing In The Cayman Islands

This memorandum has been prepared for the assistance of anyone, whether resident in the Cayman Islands or not, who is considering acting as a director of a company that is or will be a covered entity (as defined in the Directors Registration and Licensing Law, 2014 (the Law).  It is intended to provide a summary of the Law and details of how to apply for registration or licensing under the Law and is not to be taken as specific legal advice applicable to any particular issues or circumstances.

1 Registration and Licensing Framework

1.1 Covered entities

The Law applies to directors of a covered entity, which is defined as:

  • a company to which paragraphs 1 and 4 of Schedule 4 of the Securities Investment Business Law (Revised) (SIB Law) apply; or
  • a mutual fund regulated under the Mutual Funds Law (Revised).

In summary, the Law covers all directors of Cayman registered mutual funds and certain vehicles carrying on securities investment business, including most Cayman investment management and investment advisory companies, regulated or registered with the Cayman Islands Monetary Authority (CIMA).  It requires directors of such entities to be registered with or licensed by CIMA.

The Law does not affect directors of other types of Cayman companies, for example finance SPVs, portfolio acquisition companies and other private holding or subsidiary companies which are not covered entities regulated by or registered with CIMA.

1.2 Residency

The Law applies to directors whether or not they are resident in the Cayman Islands.

1.3 Qualifications

Under the Law there is no requirement for technical qualifications in order to serve as a director of a covered entity.  However CIMA may refuse to register an applicant who has been convicted of a criminal offence involving fraud or dishonesty or who is the subject of an adverse finding, financial penalty, sanction or disciplinary action by a regulator, self-regulatory organization or a professional disciplinary body.  This is not limited by materiality or time, so all such details must be disclosed.

In addition, for professional directors and corporate directors (described below), such persons will be subject to CIMA's fit and proper test having regard to such director's honesty, integrity and reputation, competence and capability and financial soundness.

1.4 Types of Directors

Directors of covered entities are divided into three categories: registered directors, professional directors and corporate directors.  Different requirements apply to each category.

  • Registered Directors

A natural person appointed as a director of fewer than 20 covered entities is required to be a registered director. Registered directors are not, as such, regulated by CIMA.

The registration fees (including the application fee) payable to CIMA for a registered director are US$853.66.

  • Professional Directors

Professional directors are defined as natural persons appointed as directors for 20 or more covered entities.  There are important exceptions in the case of representatives of some investment managers and other licensees, as discussed in section 1.5 below.

Professional directors must apply for a license and, if successful, are regulated by CIMA under the Law.  CIMA may grant a professional director license with such conditions as it considers appropriate.

The licensing fees (including the application fee) payable to CIMA for a professional director are US$3,658.54.

  • Corporate Directors

A body corporate appointed as a director for one or more covered entities must apply for a license and, if successful, will be regulated as a corporate director under the Law.  Again, CIMA may grant a corporate director license with such conditions as it considers appropriate.

The corporate director licensing regime also requires that the corporate director:

- be a company incorporated under, or registered as a foreign company under, the Companies Law (Revised); and

- appoint to its board at least two natural persons who are registered or licensed under the Law.

A non-Cayman company which wishes to serve as a director of a covered entity would therefore need to register as a foreign company under the Companies Law (Revised) in addition to applying for a corporate director license.

The licensing fees (including the application fee) payable to CIMA for a corporate director are US$9,756.10.

1.5 Exemptions from Professional Director License Requirement

There are two instances where, despite acting as a director for 20 or more covered entities, a person would not need to be licensed as a professional director and would only need to apply to be a registered director:

(a) where the applicant will be 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 administrators license.  This avoids the need for such individuals to be effectively regulated in respect of the same activities under two separate laws; and

(b) where:

- the applicant is a director, an employee, an officer, a partner, or a shareholder of a fund manager of a mutual fund regulated under the Mutual Funds Law (Revised);

- that fund manager is registered or licensed by an overseas regulatory authority listed in the Schedule of the Law - see list attached as Appendix C; and

- the person (A) acts as a director for a covered entity by virtue of that person's relationship to that fund manager, and (B) is a registered director under the Law.

As an example, where a U.S. fund manager registered with the SEC manages, say, 25 CIMA-registered Cayman funds, and the managing member of the U.S. manager serves as a director on each of the offshore boards, that managing member must register in Cayman as a registered director but will not need to register as a professional director.

1.6 Securities Investment Business Law

This section 1.6 is not relevant for persons who intend to serve only as directors of mutual funds and not, for example, as directors of Cayman companies acting as investment managers or investment advisors.

As noted above, the definition of "covered entity" includes a company to which paragraphs 1 and 4 of Schedule 4 of the SIB Law apply.

Paragraph 1 of Schedule 4 covers a company within a group of companies carrying on securities investment business exclusively for one or more companies within the same group.

Paragraph 4 of Schedule 4 covers a person carrying on securities investment business (which includes investment management and investment advisory services) exclusively for one or more of the following classes of persons:

(a) a sophisticated person;

(b) a high net worth person; or

(c) a company, partnership or trust (whether or not regulated as a mutual fund) of which the shareholders, unit holders or limited partners are one or more persons falling within (a) or (b).

"Securities investment business", "sophisticated person" and "high net worth person" are themselves defined terms, but most commonly this category applies where the vehicle in question provides investment management and investment advisory services only to CIMA registered funds and/or other vehicles with a minimum initial investment requirement of at least US$100,000.

These entities are "excluded persons" under the SIB Law so that, although they are carrying on securities investment business, they are not required to obtain a licence under the SIB Law and are simply required to register with CIMA.

2  Application Process

2.1 Registered Directors

Application for registration in the case of registered directors or for a licence in the case of professional or corporate directors must be made in the prescribed form to CIMA and submitted with the prescribed fee.  The following process must be followed for an individual to be registered as a registered director:

  • Confirm that the individual falls within the definition of a "registered director".  See flowchart attached as Appendix A.
  • Identify all covered entities for which the individual proposes to act, together (in the case of those covered entities already licensed or registered with CIMA) with their CIMA registration numbers.  The registration numbers can be found through the CIMA website (http://www.cimoney.com.ky/search/searchforentity.aspx?searchtext=Enter%20search%20term%20here\).
  • Log on to CIMA's web portal   (https://gateway.cimaconnect.com/ ) and follow the instructions set out in the portal and in the attached Appendix B.
  • Provide the information applicable to the particular type of registration sought - this is summarised in the attached Appendix C.
  • Make payment.

The application must be completed with all due care: there are stiff penalties for knowingly or recklessly furnishing any information, providing any explanation or making any statement to CIMA which is false or misleading.

Applicants should receive confirmation of registration within 48 hours.

2.2 Professional Directors and Corporate Directors

  • Confirm that the individual falls within the definition of a "professional director" or "corporate director".  See flowchart attached as Appendix A.
  • Seek legal advice from your usual contact at Ogier or any of the Ogier individuals listed below, to assist with the licence application.

2.3 CIMA FAQs

CIMA has published FAQs, which are available on their website (http://www.cimoney.com.ky).

3 Timing

No person may be appointed as a new director of a covered entity until such person has submitted an application to be registered/licensed under the Law.

In the case of a mutual fund seeking to be registered with CIMA, no director may be appointed to the board of that mutual fund who is not already registered or licensed with CIMA under the Law.

Application for registration or licensing should therefore be made as soon as possible to avoid any delays in appointment of appropriate directors.

4 Ongoing Requirements

4.1 Annual Fees

Registered, professional and corporate directors have to pay annual fees to CIMA to maintain their respective registrations or licenses. Such fees must be paid on or before 15 January in each calendar year to avoid penalties.

4.2 Insurance Coverage

The Law requires that professional directors and corporate directors be covered by insurance against loss arising from claims in respect of civil liability incurred in connection with business of the professional/corporate director.  Such insurance must have a minimum aggregate cover of US$1.25m and minimum cover of US$1.25m for each and every claim.

There is no requirement under the Law for registered directors to maintain insurance coverage.

4.3 Notification of Changes

If there is any change to the information provided to CIMA in an application for registration or the grant of a license under the Law, the relevant director is required to inform CIMA within 21 days of the change.  Again, there is no materiality threshold and there are significant penalties for failing to comply with this requirement.

5 CIMA's Powers

CIMA has extensive powers of inspection and inquiry under the Law.  CIMA may also cancel, suspend or revoke the registration/license of a director and may impose such conditions as it thinks fit.

6 Maintenance of Registration Data

CIMA maintains a register of directors which contains particulars of each registered director, professional director or corporate director.  This includes:

  • the director's name and address;
  • the date of registration or the date on which a license was issued, as applicable; and
  • any other information that may be prescribed.

For the time being, this information is not publicly available but may be accessible on a regulator-to-regulator basis using existing inter- governmental protocols. CIMA has addressed public availability in their FAQs as follows:

"This database will be maintained by [CIMA] in accordance with the confidentiality provisions under section 50 of the Monetary Authority Law (2013 Revision).  In practice, this means that your information will not be made available to the public, and your information is protected from freedom of information requests.  However, the public will be able to search for your name to see whether you have been registered or licensed in accordance with the Law.  The results of any search for your license or registration status will only show your name, the type of registration or license you hold, your registration/license number and the date on which you were licensed or registered.  While the creation of a public database has been discussed, it does not form part of this Law."

At the date of this client briefing, the public search function has not been activated.

7 Further Advice

This client briefing has been prepared for clients and professional associates of Ogier.  The information and expressions of opinion which it contains are not intended to be a comprehensive study or to provide legal advice and should not be treated as a substitute for specific advice concerning individual situations. Please contact your usual contact at Ogier or any of the Ogier individuals listed here to assist with you registration or licensing application.

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 Mondaq.com.

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

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
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
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
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
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
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

Mondaq.com (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 www.mondaq.com

To Use Mondaq.com 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.

Disclaimer

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.

General

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