Guernsey: Cayman Islands Quarterly Update - May 2017

Beneficial ownership registers

In April 2017, the Cayman Islands Government met its commitment to the UK Government made a year earlier by enacting a regime requiring Cayman Islands companies to maintain registers of their beneficial owners. The regime has not yet come into force, but is expected to do so by the end of June 2017. The regime has certain regulated and listed company exemptions and generally only applies to ultimate beneficial owners holding more than a 25% interest, together with certain entities through which their interest is held.

Companies for which our service company, CO Services Cayman Limited, provides the registered office can expect to receive a guide to complying with the new regime shortly.

Regulatory update

Administrative fines

In December 2016, additional statutory powers were approved for the Cayman Islands Monetary Authority (CIMA) to impose administrative fines on persons subject to the Cayman Islands regulatory and/or anti-money laundering regime. The additional powers are expected to come into force during 2017 and will put CIMA's enforcement powers on an equal footing with most onshore regulators.

Fund annual returns

In January 2017, an amendment to the reporting regulations that apply to hedge funds registered with the Cayman Islands Monetary Authority has clarified that funds with multiple sub-funds must submit a separate Fund Annual Return for each sub-fund.

Tax transparency reporting update

CRS regulations

In December 2016, the Cayman Islands regulations applicable to registration and reporting under the Common Reporting Standard (CRS) were amended. The amendments were primarily to incorporate details of the enforcement regime, with the introduction of specific offences for non-compliance with the CRS regime that can result in fines or penalties of up to US$61,000 with additional daily penalties for ongoing non- compliance. However, the amendment also introduced a significant change to the registration and reporting requirements for nil reporting entities. Nil reports under CRS (for reporting entities with no reportable accounts) are now mandatory (under FATCA they are still optional) and Cayman Islands investment managers and fund general partners are now required to register and report under CRS, even if, as is likely, they have no reportable accounts and will be submitting a nil report.

Updated CRS guidance notes

In April 2017, the Cayman Islands Tax Information Authority (TIA) issued updated CRS Guidance Notes, which now contain up to date lists of Participating Jurisdictions and Reportable Jurisdictions for CRS reporting purposes. The CRS Guidance Notes and copies of the related regulations can be viewed on TIA's website here.

AEOI Portal user guide

The TIA has issued an updated AEOI Portal user guide v.3.1 on 17 May 2017. This can be accessed online here.

Extension to 2017 deadlines

As 2017 is the first CRS reporting year, the registration and reporting deadlines for 2017 have been extended as follows:

  • TIA's AEOI Portal is now open for CRS registration and for FATCA registration and reporting. It is expected to open for CRS reporting the week of 12 June 2017
  • CRS and FATCA registration deadline is 30 June 2017
  • CRS and FATCA reporting deadline is 31 July 2017
  • Any UK CDOT reporting should be included in the CRS report for the UK

Foundation companies

The Foundation Companies Law, 2017 was enacted in April 2017 and should come into force shortly. This law introduces the Cayman Islands foundation company as an alternative to trust structures, which are unfamiliar to clients in civil law jurisdictions. The foundation company also has the benefit of separate legal personality and perpetual succession, while being more flexible than a traditional company with regard to its ownership and control structures.

Cayman Enterprise City aviation park

In April 2017, Cayman Enterprise City, a special economic zone in the Cayman Islands, added an Aviation Park designed to attract aviation services businesses. The new park supplements its existing offering of an Internet Park, Science and Technology Park, Media Park, Commodities and Derivatives Park and Maritime Services Park.

Litigation updates

Section 238 mergers - recent developments

Three recent unreported judgments considered the process under section 238 of the Companies Law for valuing the shares of a shareholder of a Cayman company who dissents to the terms of a merger or consolidation.

Shanda Games Limited

In what was the first judgment in the Cayman Islands to consider the meaning of "fair value" in the context of section 238 of the Companies Law since the Integra Group decision in 2015, the Court confirmed that: (i) fair value is to be established by the Court undertaking a fresh assessment of all relevant factors, in consideration of the parties' expert evidence and where necessary determining which expert's evidence is to be preferred; (ii) while they are not binding on the Cayman Courts, it was appropriate to consider the Delaware and Canadian authorities decided on similar legislation in those jurisdictions; and (iii) the shares of the minority shareholder(s)

should be valued as a proportion of the value of the company, without the application of a "minority discount" to reflect the fact that the shares represent a minority holding. In a decision that is likely to be relevant to future section 238 applications, the Court also accepted that there is sufficient evidence of the "China effect", which is the theory that for a period from around November 2010, US investors tended to undervalue Chinese companies.

Qihoo Technology Co Ltd

The company had offered the dissenting shareholders US$17 million for their shares and commenced proceedings under section 238 proceedings when this offer was not accepted. As security for the payment of the fair value of the shares, the company agreed to pay US$92 million into Court.

The dissenting shareholders then made an application under GCR O.29 for an Order that the company make an interim payment to them. The Court accepted that at trial the dissenting shareholders would receive at least US$17 million, and so ordered the company to make an interim payment in this amount, rejecting the company's argument that section 238 is a self-contained statutory code which does not permit any discretionary overlap with the interim payment regime in GCR O.29.

Homeinns Hotel Group v Masco Capital Investments Limited et Ors, 7 February 2017 - discovery issues

The Court was asked to determine the types of documents the parties to a section 238 petition should be required to disclose. The Court rejected the company's argument that discovery should take place in the usual way, i.e. by the exchange of lists of relevant documents in each party's possession, noting that in a section 238 application it is the company that will hold the relevant documents. Instead, the Court directed the company to provide certain classes of documents identified by the dissenting shareholdings as relevant to the valuation and in the possession of the company.

In Re CHC Group Ltd directors' rights to appoint provisional liquidators

In China Shanshui Group Limited, it was held that directors needed express authorisation in the company's articles in order to present both a winding-up petition and an application to appoint provisional liquidators. In CHC Group Ltd, the Court held that directors were permitted to apply for the appointment of provisional liquidators without such authorisation where the application followed the presentation of a petition by one of the company's creditors. In distinguishing China Shanshui, McMillan J noted that it was clear that the judgment in that case was only concerned with applications by directors to appoint provisional liquidators which followed a petition presented by the company's directors, and not by a creditor.

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
Events from this Firm
12 Sep 2017, Other, St Peter Port, Guernsey

We are sponsoring the Guernsey Champagne Reception in Monte Carlo on 12 September.

13 Sep 2017, Seminar, St Peter Port, Guernsey

This annual one day seminar will be held in Guernsey on 13 September at the Duke of Richmond Hotel.

20 Sep 2017, Conference, St Peter Port, Guernsey

In association with the GTA, we are pleased to offer a unique, interactive event that will explore the role of integrity in the modern employment relationship, with a particular focus on the financial services sector.

 
In association with
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
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.