Licensing of banks in the Cayman Islands

If the merger transaction will not have a material adverse effect, OfReg is required under URCA to consent to the merger transaction. Stamp duty may be payable in connection with the documentation executed in or thereafter brought within the jurisdiction of the Cayman Islands (perhaps for the purposes of enforcement). In most cases, this duty is of a relatively de minimis fixed amount except in limited circumstances, such as when security is being granted over property in the Cayman Islands.

Hedge Funds: Streamlining Operations and Ensuring Compliance with Outsourced Administration

Exempted companies are incorporated under the Companies Act (As Revised) of the Cayman Islands (the “Companies Act“) and are the most common form of Cayman Islands vehicle used when carrying on business mainly outside of the Islands. They offer a flexible and tax-efficient structure for companies to operate in the global market. The main constitutional documents of an exempted company are its memorandum and articles and association that set out the rules for the governance and operation of the company. The issued share capital of an exempted company can be entirely nominal (for example, a single share) and the liability of the shareholders is typically limited to any amounts unpaid on the shares. There are no restrictions on the number of directors or shareholders that an exempted company may have.

The books of account must be such as are necessary to give a true and fair view of the state of the company’s affairs and explain its transactions. The books of account must be retained for a minimum of five years from the date on which they are prepared. A company that knowingly and willfully contravenes these requirements will be subject to a penalty of USD6,100. The books of account need not necessarily be kept at the registered office, but a company must provide to its registered office, annually or with such other frequency and within such time as may be prescribed, information regarding its books of account.

An ordinary company should be used in the case of a Class A banking licence, as such a company is permitted to carry on local business. An ordinary company must, unless it is licensed under certain other acts (such as the BTC Act), be at least 60% Caymanian owned and controlled or licensed under the Local Companies (Control) Act (Revised). The CIMA manages the Cayman Islands currency, regulates and supervises financial services, provides assistance to overseas regulatory authorities and advises the Cayman Islands government on financial-services regulatory matters. Judiann Myles, 47, had worked some 25 years for the Cayman Islands Monetary Authority, which has had occasion to intersect and work with officials from the Bermuda Monetary Authority as well as other public and private sector professionals in Bermuda’s financial services industries. “Carey Olsen” in the Cayman Islands is the business name of Carey Olsen Cayman Limited, a body corporate recognised under the Legal Practitioners (Incorporated Practice) Regulations (as revised). However, a claimant emerging after dissolution can make an application to restore a company that has been struck off and can potentially pursue the directors personally.

What are the different types of vehicle/legal forms through which people carry on business in your jurisdiction?

Where the licensee is a Cayman Islands company, the licensee’s auditor must be a local auditor approved by CIMA. This is the most common Cayman bank licence and permits the holder to carry on offshore banking business with overseas clients (ie non-Cayman Islands residents). Business may be carried on in the Cayman Islands for clients from outside the Cayman Islands.

Following the commencement of the POCA revisions, these SAR defenses are now only available to a person who filed a SAR and sought consent from the FRA prior to approving a suspicious transaction or any act which may be potentially a money laundering offence. Regulation 31 of the AMLRs outlines the requirements for record-keeping procedures to be maintained by the RPs. Further, Part II section 8(E) of the AML Guidance notes reiterates that RPs shall ensure that those records will be available to the Authority on request. Regulation 3(2) of the AMLRs and part II sections 2(C), (10) (12) (13) (14) and section 10(C) of the AML Guidance Notes set out the requirements and/or considerations before and/or after placing reliance or outsourcing/delegating the performance of the RP’s compliance function. Based on the Inspections conducted, RPs lacked appropriate policies and procedures as outlined in the Executive Summary. This Circular derives from two fxprimus review sets of data, which have been separated as overall findings per RP inspected, and CDD and risk assessment findings, across files reviewed.

An exempted company may not trade in the Cayman Islands with any person, firm or corporation except in furtherance of the business of the exempted company carried on outside the Cayman Islands, nor may an exempted company own land in the Cayman Islands without the consent of the Financial Secretary. It should be noted that these restrictions do not prevent an exempted company effecting and concluding contracts in the Cayman Islands and exercising in the Cayman Islands all of its powers necessary for the carrying on of its business outside the Cayman Islands. In the case of a branch operation, the existing overseas bank must be registered under the Companies Act (Revised) (Companies Act) as a foreign company with a place of business in the Cayman Islands. There is a prescribed procedure requiring, amongst other things, copies of corporate documents and names and addresses of directors to be submitted to the Cayman Islands Registrar of Companies (the Registrar). In other cases, a Cayman Islands company is incorporated as an exempted, ordinary non-resident or ordinary company. This class of licence permits the holder to carry on local and overseas banking business and is usually only available to a branch or affiliate of a major international bank.

A company may be placed into official liquidation by the Court making a winding up order upon a petition by the company, a creditor, any shareholder, or the Cayman Islands Monetary Authority. The Court will appoint official liquidators over the company, and their primary duty will be to collect in the company’s assets and distribute them to the company’s creditors, plus500 review with any surplus assets distributed to the company’s shareholders. On the appointment of the voluntary liquidator, all of the powers of the directors cease, except so far as the company in general meeting or the liquidator sanctions their continuance. Any person, including a director or officer of the company, may be appointed as its voluntary liquidator.

• A regulated entity must establish, implement, and maintain a corporate governance framework which provides for sound and prudent management oversight of the regulated entity’s business and protects the legitimate interests of relevant stakeholders.
• The new Corporate Governance Rule and Internal Controls Rule create binding obligations on regulated entities, a breach of which may lead to the imposition of fines or other regulatory action.
• Please contact our Regulatory & Tax team or your usual Harneys contact to discuss your needs.
• On the appointment of the voluntary liquidator, all of the powers of the directors cease, except so far as the company in general meeting or the liquidator sanctions their continuance.
• The Local Companies (Control) Act (As Revised) of the Cayman Islands (“LCCA”) has protective provisions therein that provide that a Local Company must have 60% Caymanian shareholders and directors, who maintain 60% of the economic and voting control of the company.

Money Services Business

The amount arising on a capital reduction is treated as a realised profit and, unless otherwise specified, will be credited to the profit and loss reserve of the company. The company may also opt to return the amount arising on the reduction directly to the shareholders. This is known as a direct payment capital reduction and either cash or non-cash assets may be returned. This may be an option when the company has capital that is surplus to its requirements and that it wishes to return to shareholders. Based on Cayman Islands common law principles, profits may result from income as well instaforex review as realised and unrealised gains.

Fiduciary Services Division

• The Cayman Islands currently has no form of income, corporate or capital gains tax and no estate duty, inheritance tax or gift tax.
• On the making of a winding up order, an automatic stay is imposed prohibiting any suit, action or other proceeding from being proceeded with or commenced against the company without the leave of the Court.
• Ordinary non-resident companies cannot engage in any business activities within the Cayman Islands.
• The strike-off process is undertaken by the directors of the company or the general partner on behalf of a partnership.
• Under the AMLRs, RPs are expected to train their employees and also take appropriate measures from time to time to make employees aware of their AML/CFT procedures and the enactments relating to money laundering, terrorist financing, proliferation financing and targeted financial sanctions.

Furthermore, any assets of the company, present or future, are deemed to be ‘bona vacantia‘ and vest in the Crown. The strike-off process is undertaken by the directors of the company or the general partner on behalf of a partnership. Creditors and contributories of the company can also apply to the Court for a supervision order if the company is or is likely to become insolvent, or the Court’s supervision will facilitate a more effective, economic or expeditious liquidation in the interests of the creditors and contributories. If a supervision order is made, the liquidation will proceed in the same manner as an official liquidation.

Any update in documented policies should be revised to implement considerations of the ruling. It is frequently used as a private equity fund, hedge fund or feeder fund for international investors. The respective rights and obligations of the general partner and limited partners are set out in an exempted limited partnership agreement. Limited partners benefit from limited liability with all management responsibility vesting in the general partner who is liable for the debts and liabilities of the ELP in the event that the assets of the ELP are inadequate. The new rule and statements guidance apply to all entities that are registered with or licensed by CIMA under all regulatory laws.

CIMA has a regulatory handbook, which includes its policies and procedures for carrying out its regulatory and co-operative functions, and has power, under the Monetary Authority Act (Revised), to issue rules (which are binding on licensees) and statements of guidance (which are not binding, but compliance with which is expected). All banks licensed in the Cayman Islands are also subject to, and required to comply with, the provisions of the Proceeds of Crime Act (Revised), the Anti-Money Laundering Regulations (Revised) and Guidance Notes issued by CIMA in relation thereto. That framework should be, amongst other things, commensurate with the size, complexity, structure, nature of business and risk profile of its operations. Depending on the form the fund takes, these obligations directly apply to the general partner of a limited partnership, the trustee of a unit trust or the board of a company. On Oct.14, 2023, the Cayman Island Monetary Authority’s (CIMA) new Rule on Corporate Governance for Regulated Entities (the ruling) went into effect. First published in April 2023, the Corporate Governance Rule applies to all CIMA regulated entities.

Company

The day-to-day regulatory oversight of the sector falls to CIMA’s Insurance Supervision Division. The Authority continues to expect that all RPs will take note of these findings and act to ensure that their own AML/CFT compliance frameworks meet the standards prescribed and periodically assess their AML/CFT compliance programmes to ensure that they are appropriate for the nature, size, and complexity of their business. Ogier is a professional services firm with the knowledge and expertise to handle the most demanding and complex transactions and provide expert, efficient and cost-effective services to all our clients. To complement the above reporting requirements, it is advisable that arrangements are made for a licensee’s representatives to visit CIMA regularly to discuss the affairs of the licensee.

The Statement of Guidance on Corporate Governance for Mutual Funds and Private Funds replaces the 2013 version, and all funds should ensure that their corporate governance is up to date. Control deficiencies, whether reported internally or through the internal audit function, should be communicated timely to the appropriate parties and a corrective action plan put in place. Management should develop a way of tracking the action plan and implementation of updated control procedures if necessary. The Registrar will refuse to incorporate any company whose name includes the words “bank” (or any similar word which in the Registrar’s opinion suggests any such activities) without approval from CIMA(in accordance with section 30 of the Companies Act). In addition, as a general rule, a name will be unacceptable if it is shown to be the same as that used by another bank anywhere in the world, or if it so closely resembles another name as to cause confusion, whether deliberate or not.

On 31 July 2024, the Cayman Islands Beneficial Ownership Transparency Act, 2023 (“BO Act”) and the accompanying Beneficial Ownership Transparency Regulations, 2024 (“BO Regulations”) were brought into force. At the same time, Guidance on Complying with Beneficial Ownership Obligations in the Cayman Islands (“BO Guidance Notes”) was published on the General Registry’s website. The updated requirements (“New BO Regime”) set out in the BO Act, BO Regulations and BO Guidance Notes replace the existing requirements to maintain a beneficial ownership register (“BO Register”), which were set out in the separate entity statutes. The terms of such a loan should be considered to ensure they do not give rise to any issues (e.g. made in the best interest of the Company). The loan may then be waived at a later date provided this is done in accordance with the fiduciary duties of the directors.