On 21 March 2014, the Cayman Islands government announced that it intends to introduce a new registration and licensing regime for directors of mutual funds regulated under the Mutual Funds Law (2013 Revision) and entities registered as excluded persons under the Securities Investment Business Law (2011 Revision) (the “SIBL”).
Whilst certain key details pertaining to the registration/licensing regime have not yet been released, including anticipated fee levels and pro forma application forms, the text of the proposed new law has been published as The Directors Registration and Licensing Bill, 2014 (the “Bill”). The Bill will now be subject to a short consultation period and may be subject to further amendment before the new law is enacted, which is expected to be during April 2014.
In summary, the key elements of the Bill as currently drafted provide:
- All appointed directors of ‘covered entities’ (i.e. regulated mutual funds and companies licensed under the SIBL) will be caught by the new law.
- A professional director, being a person who is appointed as a director for 20 or more covered entities, will need to apply to be licensed under the new law, unless they are a director, employee, member, officer, partner or a shareholder of (i) a company which holds a companies management licence or a mutual fund administrators licence, or (ii) a fund manager that is registered or licensed by a specified overseas regulatory authority and such director appointment arises by virtue of the relationship with the fund manager.
- All other natural persons who are directors of covered entities and professional directors who are excluded from the need to be licensed as outlined in (i) or (ii) above, will need to apply to be registered under the new law.
- Natural persons who are currently acting as directors will have up to three months from the commencement of the new law either to register or apply for a licence. Persons who are to be appointed as directors after the commencement of the new law will need to be duly registered or licensed, as applicable, prior to their appointment.
- To register or apply for a licence, a director must submit an application in a prescribed form to the Cayman Islands Monetary Authority together with the relevant fee.
- Once licensed/registered, a director will need to file notice of any material change to the information supplied on their application within 21 days of the change taking effect. Directors will also be required to make an annual filing and pay a prescribed fee no later than 15 January in each calendar year.
- There is a separate licensing regime for corporate directors, who have up to six months from the commencement of the new law to apply for a licence.
A more detailed bulletin will follow once the provisions of the new law have been finalised to advise on the next steps for directors who may be caught under the new law. No action is required at this point in time.