Cayman Islands Directors Registration and Licensing Law: CIMA Requires Registration or Licensing of Fund Directors by September 3 (Including Directors Employed by Fund’s Investment Manager)

by Foley Hoag LLP
Contact

Under the Cayman Islands Directors Registration and Licensing Law 2014 (the “Law”), beginning June 4, 2014 directors of (a) “mutual funds” regulated under the Cayman Islands Mutual Funds Law (2013 Revision) and (b) companies registered as “Excluded Persons”1 under the Cayman Islands Securities Investment Business Law (2011 Revision) (collectively, “Covered Entities”) must register with, or obtain a license from, the Cayman Islands Monetary Authority (“CIMA”). Most Cayman hedge funds are regulated as mutual funds by CIMA so most Cayman hedge fund directors will need to comply with the Law and register, including directors who are employees of the fund’s investment manager. Compliance is not limited to “professional directors” only. Directors of private equity and venture funds also need to register if the fund is registered as a mutual fund with CIMA, although most private equity and venture funds are not so registered.

Who Is Subject to the Law?

The Law applies to all directors of Covered Entities, regardless of whether the director resides in the Cayman Islands, and places directors in three categories, as described below.

Registered Directors

Directors of fewer than twenty Covered Entities (“Registered Directors”) must register with CIMA and pay an annual fee. Individuals who are not currently directors must register before being appointed as a director, and individuals already acting as directors of Covered Entities have until September 3, 2014 to register with CIMA. The registration process requires directors to provide the following information:

  • Full legal name and date of birth
  • Place of birth and nationalities
  • Principal and postal addresses, e-mail address and telephone number
  • Whether the director has been convicted of a criminal offence involving fraud or dishonesty
  • Whether the director is the subject of an adverse finding, financial penalty, sanction, disciplinary action or proceeding by a regulator, self-regulatory organization or a professional disciplinary body

Registered Directors must notify CIMA within 21 days of any changes to such information and will be subject to penalties for failure to make such updates.

Professional Directors

Directors of twenty or more Covered Entities (“Professional Directors”) must apply with CIMA for a license rather than simply registering. Individuals already acting as Professional Directors have until September 3, 2014 to obtain a license. Professional Directors must apply for a license unless they fall under one of the exceptions for licensing, in which case they will simply need to register with CIMA. The exceptions generally cover directors who are affiliated with (i) a company holding a Companies Management License or Mutual Fund Administrators License or (ii) an investment manager registered or licensed by a specified overseas regulatory authority, which include the SEC, the CFTC and FINRA.

Corporate Directors

Corporate entities holding directorships of Covered Entities (“Corporate Directors”) must be licensed unless they hold a Companies Management License or Mutual Fund Administrators License issued by CIMA. Entities already acting as Corporate Directors of Covered Entities have until December 3, 2014 to obtain a license.

Professional Directors and Corporate Directors regulated by the Law are also required to maintain D&O insurance with an insurer authorized by CIMA.

What Is the Process for Registering under the Law?

The registered office of each Covered Entity will receive a list from CIMA containing unique identification numbers (“Unique IDs”) for all of the directors associated with a Covered Entity and will then provide each director with his or her Unique ID and other information, including the proper website address at which the director can register. If a director does not get a Unique ID through a registered office service provider, he or she needs to contact CIMA directly by e-mail to DirectorsRegistration@cimoney.com.ky. Directors should be on the lookout for a communication from their registered office service provider, and should reach out to such service provider to discuss timing of receipt of the necessary information if it is not received in the next few weeks. Once they receive their Unique IDs, directors must register and pay the registration fee through a CIMA web portal and should expect to receive confirmation of registration within 48 hours of registering.

There may be significant financial penalties for failure to comply with applicable registration or licensing requirements. For more information, the full text of the Law is available here, related regulations are available here, and FAQs published by CIMA are available here.


1. The relevant category of Excluded Persons includes investment managers and advisers incorporated as Cayman companies, which provide investment management or advisory services or engage in other securities investment business exclusively for sophisticated persons, high net worth persons, or an entity whose investors are either sophisticated persons or high net worth persons. In general, for these purposes, a sophisticated person is a listed or regulated entity, or an experienced investor that invests more than US$100,000 per transaction. A high net worth person is an individual with a net worth of at least US$1,000,000 or a person with total assets of at least US$5,000,000. Registration requirements for Excluded Persons are available here.?

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Foley Hoag LLP | Attorney Advertising

Written by:

Foley Hoag LLP
Contact
more
less

Foley Hoag LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.