Whether re-locating as a solo expat, with family or as a retiree from work, Cayman provides superior options for long term, short term (leisure/alternative), work or event driven moves for HNWIs, UHNWIs and digital nomads.

Cayman offers individuals and families a suite of residency options for every circumstance, providing a welcome alternative to city life with diverse high-end residences offered for purchase.  As well, living in Cayman provides access to professional service providers of the highest calibre to facilitate businesses and family offices.

All residency options may include family and dependents.

The options to consider are as follows:

I. Long Term Residency and Citizenship – Certificate of Permanent Residence for Persons of Independent Means;

HNWI’s and UHNWIs of all ages who wish to relocate long term, may apply for indefinite residence in Cayman by means of a certificate of permanent residence for persons of independent means. In addition to being able to reside on island for life, the holder also has the option to work if desired (application required).

After residing in Cayman for 5 years, the holder is eligible for naturalization as a British Overseas Territory Citizen and eventually has the option to apply or the right to be Caymanian.

An applicant will be required to invest a minimum of US$2.4 million in developed real estate as well as furnish proof of having financial resources to maintain the applicant and all dependents.

There is a minimum residency requirement of 1 day per year.

II. Long Term Residency (25 years) – Persons of Independent Means

For persons who wish to establish a secondary residence, with no interest in British or Cayman citizenship or in obtaining the right to work on island, the 25 year residency certificate for persons of independent means may be suitable.

An applicant will be required to invest a minimum of US$1.2 million of which 50% should be in developed real estate. The applicant must also provide proof of a continuous source of annual income of US$150,000 or deposit US$500,000 with a local licensed bank.

There is a minimum residency requirement of 90 days per year.

III. Residency Certificate – Substantial Business Presence

This residency category gives the holder the right to work in Cayman in the business in which he has invested or is employed in a senior capacity. The grant is for 25 years which may be renewed.

The applicant must provide proof of ownership of an interest of 10% or more in the business which employs four (4) persons full time in Cayman or be employed in a senior management capacity.

There is a minimum residency requirement of 90 days per year.

IV. Residency Certificate – Direct Investment

With this residency option, the applicant will receive a 25-year residency grant. The applicant must provide proof that:

i.    he or she has made or proposes to make an investment of not less than US$1.22 million in a licensed, employment generating business which employs at a minimum 30% Caymanian staff; and

ii.    he or she has an entrepreneurial background including knowledge relevant for the business being undertaken.

There is a minimum residency requirement of 90 days per year.

V. Work / Event Driven Short Term Residency – Global Citizen Concierge Program

This program is a short-term initiative introduced in response to the coronavirus pandemic. It was recognized that many persons who now work from home would prefer to work remotely from anywhere but home and specifically a place with attractions and amenities that Cayman has to offer. With this program, digital nomads may reside and work in Cayman for a maximum of 2 years.

Applicants are not required to make any investment in Cayman however they must provide proof of employment outside of Cayman with minimum income of US$100,000 for single persons, US$150,000for couples and US$180,000 for families with children.

There is a minimum residency requirement of 90 days per year.

Purchasing Real Estate in Cayman

Cayman’s requirements for property ownership is simple – there are no restrictions on foreign ownership of property in Cayman. The only significant acquisition cost is stamp duty which is 7.5% on land transfers.  There are no property, corporate, wealth, withholding, capital gains or inheritance taxes in Cayman which makes investing in the Cayman Islands that much more attractive.

Why do HNWIs and UHNWIs choose to Relocate their Families and Businesses to Cayman?

• Stable government
• First class international financial centre
• Tax neutrality
• British Overseas Territory status
• No restrictions on foreign ownership of real property
• Ease of accessibility by air to major cities in the US, Canada, the UK and the Caribbean
• Superior standard of living
• Modern Infrastructure
• Low crime rate

Premier health and education facilities

EdMills LawFirm’s experienced Relocations and Acquisitions specialists are trusted advisors who navigate, collaborate and support. To discuss your requirements for residency, real property and business acquisitions and licensing in Cayman, please contact:

The post Family & Business Relocation to the Cayman Islands appeared first on EdMills LawFirm - Cayman Islands Law Firm.

Membership in Worldwide Alliance Will Enhance Service to Clients

EdMills LawFirm has joined TAGLaw^®, a worldwide alliance of independent law firms and a division of TAG Alliances^®. EdMills LawFirm will be the exclusive member of TAGLaw for the Cayman Islands.

TAGLaw members are invited to join TAGLaw only after undergoing a comprehensive vetting and selection process. Firms are carefully chosen based on professional competence, commitment to client service, reputation within the legal community, and recommendations from existing members, and are ultimately reviewed and approved by the TAGLaw Advisory Board.

“We are delighted to become members of this alliance and expect our clients will be the biggest beneficiaries of our association with TAGLaw. TAGLaw will provide us with additional regional and international legal support to help us better serve our clients” said Edward Mills, Practice Leader of EdMills LawFirm. 

“EdMills LawFirm is an excellent firm, and we are pleased to have them as members of the alliance,” said Richard Attisha, President & CEO of TAGLaw and TAG Alliances. “The breadth and quality of their services as well as their reputation and prominence in the Cayman Islands makes them an attractive resource for our membership.”

About TAGLaw^® and TAG Alliances^®

Founded in 1998, TAGLaw® is an international alliance of high-quality, independent law firms. TAG Alliances^® is composed of three groups: TAGLaw, TIAG^® (The International Accounting Group), and TAG-SP^®. TIAG is an international alliance more than 115 independent accounting firms while TAG-SP is a complementary association of strategic business partners. Collectively, TAG Alliances provides accounting, legal, financial, and business support services on a worldwide scale. With approximately 18,000 professionals in over 290 member firms, and more than 750 offices in over 110 countries, TAG Alliances serves tens of thousands of clients from all industry and commercial sectors.

The post EdMills LawFirm Joins International Legal Alliance TAGLaw® appeared first on EdMills LawFirm - Cayman Islands Law Firm.

The Cayman Foundation Company (the “Foundation Company“) is governed by the Companies Law (2020 Revision) (the “Law“) of the Cayman Islands except as specified in The Foundation Companies Law, 2017.  The Foundation Company is a not for profit body corporate having separate legal personality and may be established for any lawful purpose including commercial and charitable purposes.  While having the features of a company, the Foundation Company also has properties customarily attributed to the common law trust and the civil law foundation.

The following is a summary of the key features of the Foundation Company.

1. Registration Requirements

1. be limited by shares or by guarantee, with or without share capital;
2. have a memorandum of association (the “Memorandum“) that:
   1. states that it is a Foundation Company;
   2. describes its objects;
   3. provides for the disposal of any surplus assets on winding-up; and
   4. prohibits dividends or other distributions of profits or assets to members; and
3. have adopted articles of association (the “Articles“)

The directors and members of an existing company incorporated under the Law (a “Cayman Company“) or the incorporators of a new Cayman Company may apply to the Registrar of Companies (the “Registrar“) for a Cayman Company to be registered as a Foundation Company.[1] Where the registration requirements are met, the Registrar will issue a certificate declaring that the Cayman Company is a Foundation Company.  There is no minimum capital requirement for a Foundation Company.

2. Constitution

The Memorandum and the Articles of the Foundation Company (the “Constitution”) must be registered with the Registrar but are not open to public inspection.

The Constitution describes how the Foundation Company will be managed and may be tailored to meet the specific requirements of its founders.  The Constitution may be amended during the life of the Foundation Company and the power to amend the Constitution may be given to any person.  Where there is no amendment process stated in the Constitution[2], it may be amended by a special resolution signed by the persons entitled to vote at a general meeting of the Foundation Company.[3]

The Constitution may confer duties, powers and rights on founders, directors and members and include provisions governing the admission of members as well as the appointment or removal of directors and officers. Additionally, the Constitution may authorize the appointment of one or more supervisors. Supervisors may be given duties of any description and while there is no requirement for them to have supervisory powers, they can be given responsibility to oversee directors.

Supervisors are granted an unconditional right to vote at general meetings. If permitted under the Constitution, the Foundation Company can cease to have members and become an “ownerless vehicle” as long as it continues to have one or more supervisors.  Where it ceases to have members, the Foundation Company’s existence, capacity or powers will not be affected, however any subsequent admission of members must be expressly authorized by the Constitution. 

3. By-Laws

The Foundation Company may adopt confidential Bylaws, which would be similar to a letter of wishes for a trust in that the Founder’s wishes may be demonstrated in the Bylaws.  The Foundation Company must appoint at least one director and its directors and officers are required to comply with the Bylaws, to the extent that they do not contravene applicable law and the Constitution and provided that the Foundation Company is able to meet any liabilities relating to such compliance.  Matters which can be set out in the Bylaws include the manner in which amendments are made, the obligations of the founders and the delegation powers to the directors and supervisors.  The Bylaws do not form part of the Constitution and can remain private.

4. Directors and Interested Persons

Directors of the Foundation Company must ensure that:

1. the objects as set out in the Constitution and any By-Laws are achieved;
2. liabilities can be met; and
3. there is no contravention of applicable laws. 

Directors may also be required to provide accounts and other material information concerning the Foundation Company’s business and affairs to assigned persons (“Interested Persons”) on request or in the manner determined by an ordinary resolution.  Interested Persons may be any of the following: 

1. members or supervisors;
2. persons with the right to be members or supervisors; or
3. persons declared under the Constitution to be Interested Persons.

Interested Persons will have many of the rights, powers and duties which may be exercised by a member of a Cayman company that is not a Foundation Company. Interested Persons also have the authority to bring an action in the name of the Foundation Company for the enforcement of the duties and liabilities of the directors.

5. Secretary

The directors of the Foundation Company must appoint a “qualified person” as the secretary. “Qualified person”, for a Foundation Company means a person who is licensed or permitted by the Companies Management Law (2018 Revision) to provide company management services in the Cayman Islands.[4] The secretary of the Foundation Company  has a duty to ensure that the Foundation Company complies  with applicable Cayman Islands legislation governing anti-money laundering and counter-terrorism financing (“AML Laws”).[5] The secretary must therefore be provided with all information necessary for the fulfilment of that duty.  A Foundation Company is generally prohibited from accepting an asset contribution that is gratuitous or is in consideration of a share issue, unless its secretary has provided notice that there appears to be no restrictions on such acceptance under the AML Laws.[6]

6. Registered Office and Registers

The Foundation Company’s registered office must be located at its secretary’s business address and the Registrar is to be notified of its location and in the event that the location changes.  Where supervisors are appointed, a register of supervisors containing their names,  addresses and dates of their appointment and resignation must be maintained at the registered office.[7]  

7. Beneficiaries

If required, the Foundation Company may be structured to provide for beneficiaries who benefit from the carrying out of its objects. Beneficiaries do not have any powers or rights relating to the Foundation Company, its management or its assets unless such rights are expressly granted by the Constitution.

8. Limitations on disposal of assets

A Foundation Company is not permitted to dispose of its assets, if it is unable to pay its debts immediately following the date of such disposition. Payments to members of dividends or other distributions of profits or assets are prohibited.[8] A member may however receive payment from the Foundation Company as a consequence of that member being :

1. a beneficiary and receiving benefits as such;
2. entitled to remuneration as a director or other person having a duty under the Constitution;
3. indemnified for liabilities or reimbursed for expenses incurred;
4. party to a loan or other transaction or relationship entered into with the Foundation Company on terms no more favourable than if they had been negotiated at arm’s length; or
5. able to receive benefits from the disposal of surplus assets on winding-up.

9. Dispute Resolution and Applications to the Court

The Constitution may include instructions for the resolution of disputes arising among the directors, officers, Interested Persons and beneficiaries (if they are granted rights).

Applications may be made to the Cayman Court for advice, opinions, orders, directions or other forms of resolution where:

1. there is a breakdown in the appointment of directors or supervisors i.e. there is either an insufficient number or they are not dealing with the Foundation Company’s business;
2. there are insufficient numbers of members, or interested persons or they have not been performing their roles;
3. there is either no power under the Constitution to resolve the difficulties faced in paragraphs (a) or (b) above or the power is not being exercised; or
4. where the provisions in the Constitution governing the distribution of surplus assets on winding up become impracticable.

10. Firewall

Protections afforded under sections 92 and 93 of the Trusts Law (2020 Revision) of the Cayman Islands, will apply to property contributed to a Foundation Company.  Accordingly, heirship rights conferred by a foreign law will not be enforced in relation to assets contributed to a Foundation Company.

11. Uses

The Foundation Company may be utilized for a wide range of purposes including:

1. owning all or part of a family business or the establishment of a family office;
2. serving as a holding entity for underlying for-profit companies;
3. achieving wealth management or succession planning objectives including asset protection and avoidance of probate;
4. realizing philanthropic goals and managing assets maintained for benevolent activities;
5. owning the shares of a private trust company or acting as corporate protector;
6. effecting corporate investments in shares, bonds, mutual funds, bank deposits or other assets;
7. owning real estate, artwork or other high value assets where direct control is beneficial;
8. operating as, or owning the management shares of, an investment fund; or
9. the ownership of high-risk assets such as digital assets.

12. Comparison to Trusts

A key feature of the Foundation Company is the flexibility of its application and structuring when compared to a trust.  Unlike a trust, the Foundation Company:

1. does not require professional trustees or transfer of assets for its establishment;
2. may hold assets contributed by third parties; and
3. has the capacity to directly conduct investment activity, engage in commercial operations, purchase or hold title to its assets and enter into agreements.

It is to be noted that there is certainty as to a Foundation Company’s proper establishment once it complies with the formation requirements as a legal entity and is registered. On the basis of its incorporation, the Foundation Company is incapable of being set aside as a “sham” and may be less susceptible than a trust to challenges to its validity.

The post Cayman Islands Foundation Companies appeared first on EdMills LawFirm - Cayman Islands Law Firm.

Cayman’s beneficial ownership regime (the “Regime“) requires companies incorporated or registered by continuation[1] and limited liability companies in Cayman (each a “Company“) (except those which fall within an exemption under the Regime) to identify, record and maintain the details of qualifying beneficial owners (each a “Registrable Person“). The Regime[2] requires corporate services providers (each a “CSP“) to collect data in respect of certain Companies and any Registrable Persons and arrange for this information to be maintained in a secure and centralized beneficial ownership platform (the “BO Platform“), accessible only to the Minister of Financial Services in Cayman (the “Competent Authority“)[3]. Similar arrangements for a central record of beneficial ownership information are in place in all other British Overseas Territories and Crown Dependencies with the aim of ensuring that beneficial ownership information is accessible by tax and law enforcement authorities in accordance with international standards.

Measures have been taken to protect the privacy and security of personal information held on the BO Platform including the utilization of an air-gapped system with no external connectivity. The BO Platform is not publicly available and may only be searched by the Competent Authority upon a formal request of designated Cayman or UK law enforcement authorities made in respect of financial crime, money laundering and regulatory or tax matters[4].

Who qualifies as a Registrable Person?

A Registrable Person for a Company is an individual who:

1. holds directly or indirectly, more than 25% of its shares[5];
2. holds directly or indirectly, more than 25% of the voting rights[6];
3. holds directly or indirectly, the right to appoint or remove a majority of its directors or managers;
4. has the absolute and unconditional legal right to, or actually does, exercise significant influence or control over a Company; or [7]
5. has the absolute and unconditional legal right to exercise, or actually exercises, significant influence or control over the activities of a trust or partnership or other entity which is the beneficial owner of a Company.

Can a legal entity be a Registrable Person?

Yes. A legal entity which is incorporated, formed or registered in Cayman and which would be a beneficial owner of the Company if it were an individual is a Registrable Person.

How may a Company comply with the requirements of the Regime?

A Company which falls within the scope of the Regime (“In-Scope Company“) is required to:

1. identify any Registrable Persons;
2. if applicable, issue a written notice requiring beneficial owners to confirm their status as Registrable Persons[8];
3. if applicable, request that Registrable Persons provide or confirm prescribed beneficial owner information (“Required Particulars“); and
4. record the Required Particulars of all Registrable Persons in a beneficial ownership register (“Register“)[9].

What Required Particulars must be recorded in the Register for an In-Scope Company?

The Required Particulars to be recorded and maintained for a Registrable Person are:

1. for an individual:
   1. full legal name;
   2. residential address;
   3. date of birth;
   4. details from passport, drivers licence or national ID card; and
   5. if applicable, the date on which the individual became or ceased to be a Registrable Person.
2. for a legal entity:
   1. name;
   2. registered or principal office;
   3. type of entity and governing law;
   4. if applicable, the registration number and the register in which it is entered; and
   5. if applicable, the date on which it became or ceased to be a Registrable Person.

Where applicable, appropriate notations must be made in the Register of an In-Scope Company if:

1. it is known that the Company has no Registrable Person, or none has been identified after reasonable steps have been taken;
2. the Required Particulars of the Registrable Person have not been confirmed; or
3. the Company’s in still in the process of taking steps to find out if there is anyone who is a Registrable Person.[10]

Are there any Companies which are exempt from the Regime?

Yes. Companies (including their subsidiaries) which fall outside of the scope of the Regime (“Out-of-Scope Company“) include those:

1. listed on the Cayman Stock Exchange or an approved stock exchange^[11];
2. registered or holding a licence under a “regulatory law”^[12] (other than a Company which is a registered person in accordance with section 5(4) of the Securities Investment Business Law (2020 Revision), for example a Cayman Islands registered mutual fund;
3. managed, arranged, administered, operated or promoted by an “approved person”^[13] as a special purpose vehicle, private equity fund, collective investment scheme or investment fund, including where the vehicle, fund or scheme is a Cayman exempted limited partnership;
4. regulated in a jurisdiction with equivalent anti-money laundering legislation^[14];
5. named as a general partner of a vehicle, fund or scheme referred to in paragraph (c), which vehicle, fund or scheme –
   • is registered or holds a licence under a regulatory law; or
   • is managed, arranged, administered, operated or promoted by an approved person;
6. holding directly a legal or beneficial interest in the shares of a legal entity licensed under the Banks and Trust Companies Law (2020 Revision), the Companies Management Law (2018 Revision), the Insurance Law (2010 Revision), Part III of the Mutual Funds Law (2020 Revision) or the Securities Investment Business Law (2020 Revision); or
7. exempted under the laws governing the Regime.

Does a Company have any ongoing obligations to ensure compliance with the Regime?

Each Company has a duty to engage a CSP[15] for the purposes of ensuring compliance with the requirements of the Regime.

An In-Scope Company must:

1. keep the Register at its registered office;
2. notify its CSP in writing when any change in the Required Particulars occurs; and
3. provide its CSP with the Required Particulars necessary to maintain the Register and keep it up to date.

An Out-of-Scope Company must provide its CSP with:

1. a written confirmation of its exemption, indicating the basis on which it is exempted (“Declaration“)[16];
2. if applicable, prescribed information about the regulated legal entity, regulated parent entity or approved person as may be relevant to the exemption;
3. instructions that the Declaration or any amendment thereof is to be filed with the Competent Authority; and
4. an amended Declaration if any part of its written confirmation ceases to be true.

What are the consequences of the failure to comply with the requirements of the Regime?

Where a Registrable Person fails to provide the Required Particulars, an In-Scope Company may issue a restriction notice to such Registrable Person and send a copy thereof to the Competent Authority.[17] An In-Scope Company that knowingly and willfully contravenes the requirements to establish or maintain a Register commits an offence and is liable on summary conviction for each contravention to a fine of US$30,487.80[18]. Failure to provide the Required Particulars, to keep the Register up to date and to provide the Declaration may also constitute offences[19].

The post Cayman’s Beneficial Ownership Regime appeared first on EdMills LawFirm - Cayman Islands Law Firm.

The Cayman Islands is a leading international financial centre and is a desirable and favoured jurisdiction for the establishment of banking operations on account of its fine reputation, tax neutrality, reliable legal system, balanced regulatory regime and stable political and economic environment.  As at March 31, 2018, there were a total of one hundred and forty-seven (147) banks under the supervision of the Cayman Islands Monetary Authority (“CIMA”). Of these, eleven (11) are Class A Banks and one hundred and thirty-six (136) are Class B Banks. As at June 2017, total international assets and liabilities (cross-border positions in all currency and domestic positions in foreign currency) were reported as US$1.026 trillion and US$1.027 trillion, respectively (June 2016: US$1.15 trillion and US$1.20 trillion, respectively). The jurisdiction is now ranked eighth   internationally based on the value of cross-border assets – US$1.01 trillion (June 2016: US$1.13) – and seventh in terms of cross-border liabilities – US$0.97 trillion (June 2016: US$1.15), highlighting the important role of the Cayman Islands as a financial intermediary.

In this note we briefly summarise the statutory framework for the regulation of the banking sector in the Cayman Islands, then set out the various types of banking licence available, the procedures for applying for such licences, the documents required to be filed in support of the application and the applicable fees.

Regulation of the banking sector

The Banks and Trust Companies Law (2018 Revision) of the Cayman Islands (the “Banking Law“) is the primary legislation for the regulation of banks and governs the transaction of any “banking business” from within the Cayman Islands.  There are also subsidiary regulations, the Banks and Trust Companies (Licence Applications and Fees) Regulations (2013 Revision) (the “Regulations“), which prescribe the form of the licence applications as well as the fees payable.

CIMA through its Banking Supervision Division is responsible for ensuring compliance with regulatory provisions governing banks.  CIMA is provided with broad powers under Cayman Islands law over the issuance and revocation of licences or the imposition of conditions thereon, as well as in relation to the supervision of a licensee’s directors, managers and officers. CIMA has issued supervisory guidelines to be followed in the conduct of banking business.

All banks doing business in the Cayman Islands are subject to provisions of the Proceeds of Crime Law (2019 Revision) and the Anti-Money Laundering Regulations (2018 Revision) and attendant Guidance Notes^[1]. It is to be noted that the Cayman Islands have also passed legislation to implement the provisions of United States Foreign Account Tax Compliance Act (FATCA) and the Common Reporting Standards (CRS).

CIMA licenses and supervises banks in accordance with the Core Principles for Effective Banking Supervision (the “BCPs“) issued by the Basel Committee on Banking Supervision.

Definition of “banking business”

The Banking Law provides that “no banking business may be transacted from within [Cayman], whether or not such business is carried on in [Cayman], except by a person who is in possession of a valid licence granted by [CIMA] authorizing him to carry on such business.”

“Banking business” is defined as the business of receiving (other than from a bank or trust company) and holding on current, savings, deposit or other similar account money which is repayable by cheque or order and may be invested by way of advances to customers or otherwise.

Categories of Banking Licence

There are three (3) main categories of banking licences provided for under the Banking Law, which differ primarily with regards to their permissible activities.  The categories are set out below.

Category “A” Banking Licence

This unrestricted licence is for the conduct of banking business both within and outside the Cayman Islands, but is subject to any such conditions as may be imposed by CIMA.   A Class A Licence is normally granted to a branch or subsidiary of a major international bank. Class A Licensed Banks are required to maintain an office in Cayman staffed with experienced personnel.

The Regulations further subdivide Category “A” licences based on permissible activities.  The types of Category “A” licences are as follows:

• an “A” licence granted without restrictions on the carrying on of banking business within Cayman;
• an “A” licence granted with restrictions as to the carrying on of banking business within Cayman and with permission to provide principal office services to five or more other licensees; and
• an “A” licence granted with restrictions as to the carrying on of banking business within Cayman.

Category “B” Banking Licence – Unrestricted

This licence enables the holder to carry on unrestricted banking business anywhere in the world from Cayman, except that it may not service clients within the Cayman Islands itself, subject to limited exceptions.  Thus, the licensee is not permitted to:

• take deposits from any person resident in Cayman, other than another licensee or an exempted or ordinary non-resident company which is not carrying on business in Cayman;
• invest in any asset which represents a claim on any person resident in Cayman, other than a claim resulting from (a) a loan to an exempted or ordinary non-resident company which is not carrying on business in Cayman, (b) a mortgage loan to one of the licensee’s employees for the purchase or construction of an owner-occupied residence in Cayman, (c) a transaction with another licensee, or (d) the purchase of bonds or securities issued by the Cayman Government; or
• carry on any business which is outside the express scope of the Category “B” licence without written approval from CIMA.

Additionally, the Banking Law stipulates that the holder of a Category “B” licence which is neither the subsidiary or branch of a bank licensed in a country or territory outside of Cayman may not carry on business in Cayman unless it has such resources (including staff and facilities) and such books and records as CIMA considers appropriate having regard to the nature and scale of its business.  Generally, CIMA will require a minimum of two (2) persons having suitable experience to be located in Cayman, one of whom would be the Managing Director and the other the Assistant Managing Director. Alternatively, where a licensee does not maintain its own office and staff in Cayman, it must have its principal office situated at a Class A Bank or Trust Company and the authorized agents should be employees of such bank or trust company.

Restricted Category “B” Banking Licence

This category is similar to the unrestricted Category “B” licence, save that it imposes an additional restriction that the licensee shall not receive or solicit funds by way of trade or business from persons other than those listed in any undertaking accompanying the application for the licence.

This licence is therefore restricted to named clients of the licensee and might be used, for example, where the licensee is a well-established corporate group located outside Cayman which is setting up a bank in Cayman to provide a treasury function to other members of that group only (i.e. there is no intention to take third-party deposits).

The Regulations also subdivide each of the Category “B” licences and Restricted Category “B” licences based on ownership structure.  The sub-types of Category “B” and Restricted Category “B” licences are as follows:

• where the licence holder is a branch of a bank licensed in a country or territory outside Cayman;
• where the licence holder is a subsidiary of a bank licensed in a country or territory outside Cayman;
• where the licence holder is not a subsidiary or branch of a bank licensed in a country or territory outside Cayman;

Category “B” and Restricted Category “B” licensees falling within paragraphs (i) and (ii) above are considered by CIMA to be “host regulated banks”, in that they are subject to consolidated supervision in accordance with the BCPs by another banking supervisory authority (for example, the FDIC or Federal Reserve Board in the USA).  In general, upon application by a host-regulated bank for a licence under the Banking Law, CIMA will seek assurance from the banking supervisory authority of the fact of such consolidated supervision and the good standing of the applicant and will require such authority to give its approval for the establishment of the applicant.

Those licensee’s falling within paragraph (iii) above are considered by CIMA to be “home regulated banks” and CIMA will supervise these applicants on a consolidated basis in accordance with the BCPs.

Company Vehicle for Establishing a Bank in Cayman

In the case of Class A Banks, an ordinary company should be used as a Class A Bank may, in some instances, carry on business locally.

Where branch operations are contemplated, an existing foreign bank will be required to register as a branch of a foreign bank having a place of business in Cayman.

For operations which will not operate as branches, a Cayman Islands ordinary or exempted company may be utilized. The advantages of using an exempted company for a Category “B” bank licence include the tax exemption certificate (effectively a guarantee from the Cayman Government from incorporation that the licensee will not be required to pay taxes for a period of twenty (20) years), the fact that the licensee may issue shares of no par value and that it need not have “Limited” or “Ltd.” in its name.  Further information on exempted companies may be found in our publication “In Brief – Cayman Islands Exempted Companies”.

Name of Company

CIMA must approve the name of the company which will provide banking business. The name must not be similar to that of other company names in Cayman or to other banks anywhere else in the world. CIMA will not permit the use of a name which is misleading or suggests an association with an entity or organization that does not exist.

Directors and Officers

All Directors and Officers of licensed banks must be approved by CIMA. The Banking Law provides that a licensee shall not have fewer than two (2) directors). CIMA requires that directors of licensed banks have a minimum of five (5) years’ experience in a senior position. Directors and officers must meet fitness and propriety criteria which include: honesty, integrity and reputation, competence and capability and financial soundness.

Requirements as to Capital

There are applicable minimum capital requirements which depend on the type of licence issued.  For example, the Banking Law provides for all licensees to have a minimum net worth of US$487,804.88, save for Restricted Category “B” licensees where the minimum net worth is US$24,390.24.  However, this can be varied by CIMA if it is of the view that a higher net worth figure is required to demonstrate that the applicant will have, and will continue to have, financial resources (whether actual or contingent) that are adequate for the nature and scale of the business and for amount of risks underwritten.  CIMA must also be satisfied that the applicant’s owner(s) have sufficient financial strength to support the applicant and, in doing so, will also assess the financial strength of the applicant’s owner(s).

Proof that capital has been paid in will be required before a license is issued.

The Application Process

The application for a banking licence is made to CIMA in writing, accompanied by the prescribed application fee of US$2,439.02 and the supporting documents.  The licence is typically granted within four (4) to six (6) weeks from the date of CIMA’s receipt of all necessary documents in the proper form.  Upon grant of the licence (and annually thereafter), a fee is payable as set out in the table at the end of this note.

The information and documents which need to be filed with the application differ depending on the type of licence being applied for as follows:

Category “A” and “B” Banking Licence – Branch

The following documents and information must accompany the application:

• Copy of bank’s charter or constitutional documents;
• Copy of By-Laws certified by the Secretary before a notary public;
• List of directors, shareholders and the major corporate officers with full names, addresses, occupations and nationalities certified by the company’s secretary;^[2]
• In respect of the shareholders, directors and officers holding more than 10% of the applicant’s issued shares, the following documents are required:
  • personal questionnaire;
  • two (2) character references;^[3]
  • financial reference from bank/trust company verifying good financial standing or annual reports for each corporate shareholder and its parent company;^[4]
  • police clearance certificate or if not available in the home jurisdiction an affidavit of no convictions;
  • evidence that there are at least two (2) directors; and
  • evidence of relevant banking experience of at least one (1) director;
• Corporate chart showing relationship of affiliate companies and subsidiaries. CIMA will require the names and addresses of the registered office of all subsidiaries and a statement as to how much capital of each subsidiary makes up an asset of the applicant;
• Name and address of bank’s auditors. There is an approved list of over twenty (20) accountants provided by CIMA;
• Last annual report of the bank and its holding company (containing at least two (2) years figures);
• A letter to the Governor signed by the Chairman/President of the bank containing the following information:
  • business of the bank in outline;
  • short details of the bank’s subsidiaries and affiliates;
  • objectives of the Cayman branch;
  • names of authorised agents; and
  • evidence of banking experience of the directors and confirming that they do not have any criminal records;
• Undertaking to meet liabilities of the branch;
• References from two (2) different international banks;
• Undertaking not to trade in Cayman;
• Where necessary, approval of the banking supervisory authority in the country of origin and assurance from such authority of consolidated supervision and good standing of the applicant;
• Date of financial year end; and
• Any exemption required from s. 7 of the Banking Law (which imposes restrictions on the issue and transfer of shares in the licensee, subject to qualified exemptions in the case of a publicly-listed licensee).

Category “A” and “B” Banking Licence – Locally incorporated company

The following documents and information must accompany the application:

• Approval of corporate name;
• In respect of the shareholders, directors and officers of the company, the following documents are required:
  • personal questionnaire form, completed;
  • two (2) character references;
  • financial reference from bank/trust company;
  • police clearance certificate;
  • evidence of two (2) effective directors; and
  • evidence of relevant banking experience of at least one (1) director;
• Letter of recommendation from bank/trust company;
• A written assurance from the parent’s banking supervisory authority of the consolidated supervision and good standing of the applicant;
• Objectives of company:
  • reasons for establishment;
  • customer base (including names for Restricted Category “B” licence);
  • asset structure;
  • management structure; and
  • two-year projection;
• Any exemption from s. 7 of the Banking Law;
• Minimum required capital;
• Undertaking not to solicit funds in Cayman;
• Principal office;
• Authorised agents;
• Local auditors;
• Date of financial year-end;
• Memorandum and Articles of Association;
• Certificate of Incorporation; and
• Opening balance sheet

Restricted Category “B” Banking Licence – Branch

As per Category “A” and “B” Banking Licence – Branch above, save for item (iv) regarding the documents relating to shareholders and directors/managers/officers/controllers, which are not required.

Restricted Category “B” Banking Licence – Locally incorporated company

As per Category “A” and “B” Banking Licence – Locally incorporated company above, save for item (vii) regarding minimum required capital.  Here, when third party funding/liabilities are involved, the minimum required capital is US$24,390.24 or such amount as is necessary to satisfy a risk asset ratio of 15% (non-bank or unconsolidated bank subsidiaries) or 12% (bank subsidiaries).  Otherwise, for totally related operations or 100% related funding, the RAR-based capital requirement (and large exposures guidelines) can be waived if the applicant provides confirmation from all depositors/creditors that they are aware that CIMA’s normal capital adequacy (and lending guidelines) will not be applied to the operations of the bank.

Continuing Obligations

• Licensed banks must have their accounts audited annually by an approved auditor and a copy of the audited accounts must be forwarded to CIMA within 90 days of the licensee’s financial year end. These audited accounts are not required to be made public.
• Licensed banks must submit Quarterly Prudential Returns in the form prescribed by CIMA providing information required to ensure that the bank is complying with the Banking Law and is in a sound financial position.^[5]
• The minimum capital adequacy ratio for locally incorporated banks is 10%. For subsidiary banks subject to consolidated supervision in another jurisdiction CIMA requires a minimum ratio of 12% and for banks which are not subject to such supervision the minimum ration is 15%. There is no minimum ration requirement for branches regulated in another jurisdiction.
• A director or senior manager is usually required to meet with CIMA annually to discuss matters pertaining to the licensee. Additionally, CIMA may arrange periodic on-site inspections of the licensee.
• No issue of shares or transfer of shares of a licensed bank is permitted.
• CIMA must be made aware of any significant change in the licensee’s operations or activity. It is recommended that significant changes be discussed with CIMA prior to any implementation.
• The Dormant Accounts Law (2011 Revision) requires licensed banks to transfer monies held in any dormant accounts to the Cayman Government after seven (7) years of account inactivity. Licensed Banks must submit a report to the Minister of Finance and to CIMA at the time that it makes such transfers (no later than 31 March each year) and must submit a certificate of compliance, attesting that it has complied with these dormant account requirements by 31 December annually.

EdMills LawFirm regularly provides assistance to financial service providers who are seeking licenses from CIMA and can provide assistance in making application for and obtaining banking licensees including meeting with CIMA and providing introductions to Class A Licensees who may act as agents.

February 2019

Summary of Licence Categories, Fees and Restrictions

“A” domestic

Fee on Grant of Licence: US$731,707.32
Annual Fee: US$1,219,512.20
Applicable Restrictions: Unrestricted banking business both within and outside Cayman

“A” domestic (restricted) – provides principal office to five or more licensees

Fee on Grant of Licence: US$365,853.66
Annual Fee: US$365,853.66
Applicable Restrictions: Unrestricted banking business outside Cayman, but restrictions on banking business within Cayman and with permission to provide principal office services to five or more other licensees

“A” domestic (restricted) – provides principal office to less than five licensees

Fee on Grant of Licence: US$195,121.95
Annual Fee: US$243.902.44
Applicable Restrictions: Unrestricted banking business outside Cayman, but restrictions on banking business within Cayman and with permission to provide principal office services to fewer than five other licensees

Category “B”^[6]

Fee on Grant of Licence: US$85,365.85
Annual Fee:

Applicable Restrictions: Unrestricted banking business outside Cayman, but restrictions on banking business within Cayman and with permission to provide principal office services to fewer than five other licensees

Restricted Category “B”^[7]

Fee on Grant of Licence: US$54,878.05
Annual Fee: US$48,780.49
Applicable Restrictions: May not service clients within Cayman, subject to limited exceptions, and may only service named clients outside Cayman

The post Establishing a Bank in the Cayman Islands appeared first on EdMills LawFirm - Cayman Islands Law Firm.

In order to provide mutual fund administration services in or from within the Cayman Islands, a mutual fund administrator’s license is required pursuant to the Mutual Funds law (2015 Revision) of the Cayman Islands.

Generally, an entity which is applying for a mutual fund administrators licence (the “Applicant“) must satisfy the Cayman Islands Monetary Authority (“CIMA“) that it has sufficient expertise to administer regulated mutual funds, is of sound reputation and has the ability to administer regulated mutual funds in a proper manner.  CIMA has in response to data security breaches in other Offshore Financial Centers advised existing licensees that it will review the approach to data security risk management with emphasis on the following areas: technical controls, incident response and staff training. Applicants should focus on how they will protect the confidentiality, integrity and availability of sensitive customer and other information.

There are two types of licenses that may be obtained:

• A Restricted Mutual Fund Administrator’s License (“RMFAL“); or
• a Full Mutual Fund Administrator’s License (“FMFAL“).

In the case of a RMFAL the Applicant would either be restricted to administering a single fund or a specified list of funds.  While CIMA has not specified a limit on the number of funds which may be administered under an RMFAL, CIMA has advised that its policy is to subject those Applicants proposing to administer ten (10) or more funds to greater scrutiny in order to satisfy itself that such Applicants will be suitable licensees.  CIMA’s general policy is that the mutual funds to be administered by holders of RMFALs should be related mutual funds however there are exceptional circumstances in which CIMA will grant a RMFAL for the administration of unrelated mutual funds.

Additionally for a RMFAL, there are no capitalisation requirements for the Applicant, whereas for the FMFAL there is a requirement that CIMA be provided with evidence that the Applicant has a net worth of at least CI$400,000.00 (US$487,804.88).

For a RMFAL there is no physical presence requirement, whilst for a FMFAL a physical presence is required, either in the form of a physical office on island or a principal office provided by the holder of an FMFAL.

Whilst a foreign company may be registered as a mutual fund administrator, it is most common for Cayman subsidiary entities to be formed for that purpose.  Where a Cayman company serves as the Applicant, for both the RMFAL and the FMFAL CIMA’s policy is to require that the company be an ordinary resident Cayman Islands company rather than an exempted company.

It is to be noted that Cayman companies must have a minimum of one shareholder who may be an individual or entity.  The shares of a licensed administrator may not be transferred without CIMA’s approval.  A minimum of two (2) directors must be appointed and these must be fit and proper persons.

The licensee will be required to maintain good governance standards including keeping proper books of account and having its accounts audited annually by a CIMA approved auditor.  Audited financial statements of the licensee must be filed with CIMA annually however these are not available for public review.

Licensees will be required to maintain adequate anti-money laundering policies in compliance with Cayman’s anti-money laundering regime.  Licensees will also be required to be vigilant in their compliance with local laws which enforce FACTA and CRS.

The following information will be required in order to make the application:

1. In the case of a RMFAL – the location of the registered office of the Applicant in the Cayman Islands[1].

2. In the case of an FMFAL – the address of the physical office of the Applicant is required and the address of two (2) persons or the body corporate resident or incorporated in the Islands and authorised to be the Applicant’s agent in the Cayman Islands.

3. Where the Applicant is a foreign company registered in Cayman, the names and addresses of at least one (1) person authorised to accept on its behalf, service of process and any notices required to be served on it.

4. If the Applicant is a company, evidence of its incorporation and a copy of its constitutional documents which will need to be verified by a declaration made by one (1) of its directors or partners or by its secretary and either certified as a true copy by the Cayman Islands Registrar of Companies (if the Applicant is incorporated in Cayman) or certified and authenticated under the public seal of the country, city or place of the Applicant’s incorporation (if the Applicant is incorporated elsewhere) together with a certified English translation thereof, where such documents are not in English.

5. A list of the names, addresses and nationalities of all directors and corporate officers of the Applicant which list must be certified by the Company Secretary.

6. An organisational structure chart showing the relationship of the Applicant to its subsidiaries and affiliates (if any) and any holding company. If the Applicant has any subsidiaries, please provide the names and addresses of the registered offices of such subsidiaries together with a statement as to how much of the capital of each such company constitutes an asset of the Applicant.

7. A list of the shareholders and a statement of the number shares held by each shareholder in the Applicant. Additionally, the name, address and country of incorporation of any corporate shareholder which holds more than ten percent (10%) of the Applicant’s issued share capital or total voting rights.

8. The latest annual accounts of the Applicant and those of its holding company as well as annual accounts for the two (2) years immediately preceding the year of application of each corporate shareholder which holds more than ten percent (10%) of the Applicant’s issued share capital or total voting rights (together with similar accounts for the parent body, if any, of each such corporate shareholder).

9. Personal questionnaires (in the form specified by CIMA) completed and signed by:

   • each shareholder or beneficial shareholder who is a natural person holding more than ten percent (10%) of the Applicant’s issued share capital or total voting rights;
   • the beneficial owner of each corporate shareholder holding more than ten percent (10%) of the Applicant’s issued share capital or total voting rights (or evidence that the shares of such corporate shareholder are publicly traded on a stock exchange recognized by CIMA); and
   • all the directors, managers and officers of the Applicant who are involved in the administration of mutual funds.

10. 10. For each director and officer of the Applicant and for each shareholder and each beneficial shareholder who is a natural person holding more than ten percent (10%) of the Applicant’s issued share capital or total voting rights, there must be obtained:

        • not less than three (3) references acceptable to CIMA (all being dated no more than six (6) months prior to the date of submission to CIMA), including two (2) character references and one (1) reference verifying his good financial standing; and
        • a police certificate, which must be dated no more than six (6) months prior to the date of submission to CIMA and duly stamped and signed by the issuing authority.

          Please note that the financial reference letter must be from a financial institution and:

          1. should state whether the account has been satisfactorily maintained;
          2. should state the period of the relationship which should be a minimum of two (2) years; and
          3. should be signed and on a company letterhead.

The character reference letters must:

10. • not be written by any person with a familial relationship to the subject of the reference;
    • state the period for which the person writing the reference has known person who is the subject of the reference, which should be a minimum of three (3) years;
    • state the nature of the relationship;
    • be written by a person who is independent, without a vested interest in the acceptability of the reference;
    • be signed and indicate a contact name, address and telephone number; and
    • should with respect to the subject of the reference, address his or her honesty, integrity and reputation as well as his or her competence and capability in fulfilling the proposed role.

11. Résumés of each of the Applicant’s directors, including evidence of their professional knowledge and experience in the administration of mutual funds, together with relevant professional and educational qualifications and work experience.

12. Name and address of the auditor, the partner responsible for the audit and a letter from the auditor acknowledging their obligations under s. 35 of the Mutual Funds Law (2015 Revision). Note that this must be a local auditor i.e. an auditor with a local set up in Cayman. Note that all the Big 4 Auditors are in Cayman as well as numerous others.

13. A statement describing the history of the Applicant (if applicable) and a summary of the reasons for applying for a license.

14. A detailed business plan covering the first three (3) years of the Applicant’s business, which must demonstrate that the Applicant has adequate resources in terms of manpower, systems and expertise, to meet its objectives. It must also include:

    • the Applicant’s proposed business activities;
    • the Applicant’s business aims;
    • short and long term objectives and how these will be achieved;
    • proposed range of services to be provided by the Applicant;
    • a statement as to its customer base, including the type of mutual fund to be administered;
    • any assumptions or qualifications; and
    • a copy of the most recent balance sheet and details of its fee earnings, if any.

15. In the case of an RMFAL, names and addresses of the mutual fund(s) to be administered by the Applicant and a copy of the Offering Memoranda. Where related mutual funds are to be administered, evidence acceptable to CIMA that all of the proposed mutual funds to be administered comply with CIMA’s policy for related mutual funds.

16. If the Applicant is incorporated outside Cayman, (a) confirmation in writing signed by the presiding officer of the applicant and the presiding officer of its parent company (if any) that they concur in the making of the application and (b) a statement in writing in a form acceptable to CIMA accepting legal responsibility for the obligations and liabilities of the Applicant executed by and binding on the parent company, if any, of the Applicant.

17. In the case of an FMFAL, evidence that the Applicant has a net worth of at least CI$400,000 (US$487,804.88).

18. If the Applicant intends to carry on business of mutual fund administration outside of the Cayman Islands, an indication must be provided as to whether the administration will be carried out through a branch office, subsidiary or associate.

19. Whether the Applicant or its parent company (if any) is currently authorised to carry on investment, insurance or banking activities in countries outside the Islands. If so, please provide the name and address of the authority responsible for the authorisation.

20. An undertaking that the Applicant will disclose any material changes that may occur while the application is being considered[2].

21. In the case of a RMFAL, an undertaking that the Applicant will not carry on mutual fund administrator’s business for mutual funds other than those whose names and addresses are specified to CIMA[3].

22. If the Applicant or its parent company is not subject to regulation in the Cayman Islands or in any other country, the following details must be provided:

    • whether the Applicant, its parent company or its principals have ever been refused or had revoked any authorisation to carry on investment, banking or other financial business in any country;
    • whether the Applicant, its parent company or its principals have ever been refused or had revoked membership of any association of dealers in securities or of any stock exchange;
    • whether the Applicant, its parent company or its principals have, at any time during the ten (10) years prior to the date of the application had a receiver, administrative receiver or administrator appointed, or failed to satisfy a debt adjudged due or a debt in respect of which a decree has been passed against it or entered into a scheme of arrangement or composition of its debts with its creditors;
    • whether a petition for the compulsory winding up of the Applicant or its parent company has been served at any time during the ten (10) years prior to the application;
    • whether the bankers, legal advisors or auditors of the Applicant or its parent company have changed during the three (3) years prior to the date of the application and if so, details of the change, including the reason for the change;
    • whether the Applicant, its parent company or its principals have ever been convicted of any offence involving fraud or other dishonesty or of an offence under any law relating to financial services, insolvency, consumer credit or consumer protection; and
    • whether the Applicant, its parent company or its principals have ever been the subject of regulatory, administrative or other civil or criminal proceeding or investigation under the law of any country.

23. Applicable Fees are prescribed by the Mutual Funds (Fees) Regulations (Revised) in respect of the initial application and thereafter as an annual fee:

    • for an unrestricted mutual fund administration licence to administer not more than 50 regulated mutual funds: Application Fee: US$24,390.24 & Annual Fee: US$36,585.36;
    • for an unrestricted mutual fund administration licence to administer greater than 50 regulated funds: Application Fee: US$35,000 & Annual Fee US$42,682.92; and
    • for a restricted mutual fund administration licence: Application Fee & Annual Fee: USS$8,536.58.

The post Mutual Funds Administration Licence Application Requirements appeared first on EdMills LawFirm - Cayman Islands Law Firm.

Legislation applicable

Companies Act (2022 Revision) of the Cayman Islands (the “Law“).

Redomiciliation Process

Registration on transfer by way of continuation (“Transfer BWOC“).

Authority to which application for Transfer BWOC must be submitted

The Registrar of Companies (“ROC“)
P.O. Box 123
Grand Cayman KY1 – 9000
Cayman Islands
Tel: +1 (345) 946-7922
Website: www.ciregistry.gov.ky

Pre-requisites of non-Cayman entity for Transfer BWOC

An entity wishing to transfer to Cayman as an exempted company limited by shares (the “Transferring Entity”) must:

• be a body corporate, incorporated, registered or existing with limited liability;
• have a share capital; and
• be incorporated, registered or existing in a jurisdiction (the “Relevant Jurisdiction“) whose laws permit or do not prohibit the Transfer BWOC of the Transferring Entity.

On registration the ROC must be satisfied that the Transferring Entity is constituted in or substantially in a form which could have been incorporated as an exempted company limited by shares under the Law. 

Conditions for Transfer BWOC

• The name of the Transferring Entity must be acceptable to the ROC otherwise the Transferring Entity must undertake to change the name within 60 days of registration.
• Payment of the registration fee (see section “Fees“).
• Filing with the ROC, notice of the address of the proposed registered office of the Transferring Entity in Cayman.
• ROC must be satisfied that it is not against the public interest to register the Transferring Entity.
• Issue of any licence which the Transferring Entity may be required to hold to carry on its business in or from Cayman.

Documents to be delivered to ROC with an application for Transfer BWOC

• Certified copy of the Transferring Entity’s certificate of incorporation or formation or equivalent document, issued by the relevant authority in the Relevant Jurisdiction (the “Relevant Authority“);
• Certificate of good standing for the Transferring Entity issued by the Relevant Authority OR director’s declaration that the Transferring Entity is in good standing^[1];
• Certified copy of the constitutional documents (howsoever called) of the Transferring Entity as required to be filed in the Relevant Jurisdiction;
• List of names and addresses of the directors and officers of the Transferring Entity;
• Declaration by a director that the Transferring Entity’s operations will be conducted mainly outside the Cayman Islands;
• Undertaking by a director that notice of the transfer will be given to all secured creditors within 21 days; and
• Declaration or affidavit by a director (which shall include a statement of assets and liabilities of the Transferring Entity) that, having made due enquiry, the director is of the opinion that:
  • no petition or other similar proceeding has been filed and remains outstanding or order made or resolution adopted to wind up or liquidate the Transferring Entity in any jurisdiction;
  • no receiver, trustee, administrator or other similar person has been appointed in any jurisdiction and is acting in respect of the Transferring Entity, its affairs or its property or any part thereof;
  • no scheme, order, compromise or other similar arrangement has been entered into or made in any jurisdiction whereby the rights of creditors of the Transferring Entity are and continue to be suspended or restricted;
  • the Transferring Entity is able to pay its debts as they fall due;
  • the application for registration is bona fide and not intended to defraud existing creditors of the Transferring Entity;
  • any consent or approval to the transfer required by any contract or undertaking entered into or given by the Transferring Entity has been obtained, released or waived, as the case may be;
  • the transfer is permitted by and has been approved in accordance with the charter documents of the Transferring Entity;
  • the laws of the relevant jurisdiction with respect to transfer have been or will be complied with; and
  • the Transferring Entity will, upon registration hereunder, cease to be incorporated, registered or exist under the laws of the relevant jurisdiction.

Provisional registration

On payment of a fee, a Transferring Entity may apply to be provisionally registered where it satisfies the requirements other than:

• third party consents, corporate approvals or notices to creditors;
• compliance with the laws of the Relevant Jurisdiction with respect to the transfer;
• the grant of any business licence;
• Transfer is permitted and approved by the charter documents of the Transferring Entity; and

• the application is not intended to defraud creditors.

A Transferring Entity which is provisionally registered must in January of each year pay a fee and file a director’s declaration or affidavit with ROC as regards its’ solvency and constitutional form.

Registration

On registration the ROC will issue a certificate of registration by way of continuation as an exempted company and enter the Transferring Entity in the Register of Companies. The Transferring Entity shall thereafter continue as a body corporate for all purposes as if incorporated and registered as an exempted company under and subject to the Law.

The Transfer BWOC to Cayman will not operate to:

• create a new legal entity;
• prejudice or affect the identity or continuity of the Transferring Entity as previously constituted;
• affect the property of the Transferring Entity;
• affect any appointment made, resolution passed, or any other act or thing done in relation to the Transferring Entity pursuant to a power conferred by any of the charter documents of the Transferring Entity or by the laws of the jurisdiction under which the Transferring Entity was previously incorporated, registered or existing;
• except to the extent provided in the Law, affect the rights, powers, authorities, functions and liabilities or obligations of the Transferring Entity or any other person; or
• render defective any legal proceedings by or against the Transferring Entity and any legal proceedings that could have been continued or commenced by or against the Transferring Entity before its registration.

Post registration Requirements

If the constitutional documents of the Transferring Entity do not comply with Cayman law the Transferring Entity must amend them within 90 days following registration.

Registration and Annual Fees

The fee on registration and annual fees are charged by reference to authorised capital.  The minimum fee is US$731.71 for authorised capital under US$50,000 and the maximum is US$3,009.76 for authorised capital exceeding US$2 million.

The provisional registration fee is approximately US$1,830 and the annual fee for a provisionally registered company is US$1,220.

The post Fact Sheet – Redomiciliation of An Exempted Company out of the Cayman Islands appeared first on EdMills LawFirm - Cayman Islands Law Firm.

The Directors Registration and Licensing Act, 2014 (the “Act“) requires all directors of (a) investment funds regulated under the Mutual Funds Act (2021 Revision) of the Cayman Islands and (b) companies registered as excluded persons pursuant to the Securities Investment Business Act (2020 Revision) of the Cayman Islands (collectively “Covered Entities“) to be registered or licensed under the Act.

The Act places directors of Covered Entities into three categories:

• Natural Persons who will serve as directors of fewer than twenty (20) Covered Entities (“Registered Directors“);

• Natural Persons who will serve as directors of twenty (20) or more Covered Entities (“Professional Directors”); and

• Body corporates that will serve as directors of Covered Entities (“Corporate Directors“)^[1].

Registered Directors will be required to register with the Cayman Islands Monetary Authority (“CIMA“) while Professional Directors and Corporate Directors will be required to be licensed by CIMA.

The Act applies to all directors of Covered Entities regardless of their domicile or place of incorporation.

Are there persons who may be exempt or otherwise excluded in some way from the registration or licensing requirements of the Act?

• Persons who fall within the category of Professional Directors who are directors, employees, members, officers, partners or shareholders of (a) entities holding a companies management licence or mutual funds administrators licence in the Cayman Islands, or (b) a fund manager of a regulated mutual fund which fund manager is regulated by certain overseas regulatory authorities are exempted from licensing. Notwithstanding this exemption from licensing, these persons will be required to be registered under the Act.

• Persons who fall within the category of Corporate Directors which hold a Cayman Islands companies management licence or a mutual fund administrators licence are not required to be separately licensed under the Act.

• The Act is not applicable to trustees (regulated under the Banks and Trust Companies Act (2021 Revision)), or partners of partnerships or to directors of companies in liquidation.

When should proposed directors apply to be registered or licensed?

Persons proposed to be appointed to the board of Covered Entities are required to complete registration PRIOR to their appointment.

How do proposed directors apply to be registered or licensed under the Act?

The proposed director of a Covered Entity will need to:

• request an identification number from CIMA’s director gateway;

• on receipt of the unique identification number, submit their application form through CIMA’s dedicated web portal; and

• submit the prescribed payment.

For both types of applicants the online application process is commenced via CIMA’s director gateway at the following address https://gateway.cimaconnect.com/.

Only online applications will be accepted and payments will only be accepted online by VISA or MasterCard.

What fees are payable on registration or licensing?

A fee is payable on registration and following registration there is an annual fee which is payable no later than the 15^th of January in each year. The fee payable in each instance is as follows:

• Registered Directors – US$853.66

• Professional Directors –              US$3,658.54

• Corporate Directors –  US$9,756.10

How long does the registration / licensing process take?

Persons seeking registration as Registered Directors should expect the registration process to be completed within 48 hours of application.

Persons seeking to be licensed as Professional Directors or Corporate Directors should expect the registration process to be completed within 4 weeks of application.

Are there any ongoing obligations?

In addition to submitting the annual fee by the 15^th of January of each year, directors are also required to confirm the accuracy of their current registration information. Directors are required to file with CIMA any material change to the information provided in their application within 21 days of the change taking effect.

May CIMA refuse to register or license an applicant?

Yes – CIMA may decline to register or license an applicant in its discretion. Examples of instances where CIMA may refuse registration include where CIMA has information that the applicant has been convicted of a criminal offence involving fraud or dishonesty, or is the subject of an adverse finding, financial penalty, sanction or disciplinary action by a regulator, self-regulatory organization or a professional disciplinary body. CIMA may also refuse to license an applicant where the applicant is not a fit and proper person for licensing or does not have sufficient capacity to carry out duties as a professional director.

Is there a requirement to obtain directors’ insurance?

Corporate Directors and Professional Directors will be required to obtain insurance as prescribed by the Act.

Will information provided to CIMA be publicly available?

CIMA will maintain a database of directors of Covered Entities which will not be publicly accessible or subject to freedom of information requests. The only information which will be publicly available is:

• the name of director who is registered or licensed with CIMA;

• the type of registration or license held;

• the registration or license number issued to the director; and

• the date on which registration or licensing was obtained.

The post Registering and Licensing Of Directors Pursuant To The Directors Registration and Licensing Law, 2014 appeared first on EdMills LawFirm - Cayman Islands Law Firm.

The Private Family Fund (the “Family Fund”) is a popular and attractive vehicle for High Net Worth Individuals (“HNWIs”) who seek to customise their investment portfolios by using a formal investment vehicle. The particular benefits which may be enjoyed by HNWIs will depend on:

• the domicile of the HNWI;
• the local laws in the HNWI’s domicile; and
• the preferred investment strategy and goals of the HNWI.

Cayman, as the leading domicile for offshore investment funds, is most often preferred as a jurisdiction for domiciling Family Funds.

Advantages of Establishing a Family Fund

Whilst HNWIs may have the ability to manage their investment portfolios and that of their families by   using informal arrangements in multiple locations, many are now opting to establish Family Funds.  Following are some of the reasons why HNWIs have found it advantageous to establish Family Funds.

Consolidation of Assets held by a Single HNWI

Family Funds allow a single HNWI to aggregate his or her diverse investment portfolios (which may be located in several jurisdictions) into a single vehicle with one custodian. By using a Family Fund, HNWIs will have at their disposal, information in a single location regarding the type and value of their entire portfolio.

Consolidation of Assets by multiple HNWIs within a family

By means of a Family Fund, HNWIs from the same family may pool their investments into a single vehicle. Such consolidation will result in savings through lower fees made possible by consolidation, access to investments with high subscription thresholds or investments which are limited to institutional investors and access to a wider range of services, products and investments due to the Family Fund’s status as an institutional investor.

Structure and Formality

Many HNWI’s pool the investments of their family members using loose arrangements which, with the passage of time and growth of the portfolios, have not been found to be ideal. Looser arrangements place family assets at risk and prudence has dictated that more formal structures be established. The Family Fund provides formality, uniform guidelines, independent reporting, access to experienced service providers and distance from the investment process and the individual investors. By means of a Family Fund, individual family members will have access to regular reports on not just the family’s investments but that of each individual family member. Such reports will be prepared by service providers who may be held accountable. A more formal structure will also provide clear guidelines as to entry and exit from the Family Fund and will have the advantage of regulatory oversight by authorities in the fund’s domicile.

Transparency and Control

HNWIs, like many other investors have been concerned about the lack of transparency that is characteristic of non-bespoke structures. By use of Family Funds, HNWIs will have the desired access to information regarding portfolio composition and strategy. HNWIs may also have control over the fund’s investment strategy, borrowing policies and risk tolerance.

Succession Planning and Wealth Retention

A Family Fund may facilitate the smooth and efficient division or transfer of assets either during the lifetime of a HNWI or on death. Assets may be allocated by merely transferring Family Fund shares, interests or units (as the case may be) to transferees or beneficiaries, there being no necessity to liquidate those assets to effect an allocation. The imprudent disposal of family assets will be limited as transferees or beneficiaries who wish to redeem their shares, interests or units in a Family Fund must do so by means of the orderly guidelines for exit contained in the fund’s constitutional documents.

Liquidity

Investors in Family Funds will have the ability to borrow against the fund’s assets without disturbing the fund’s entire holdings.

Cayman – The Preferred Domicile for Family Funds

Cayman is generally preferred as a domicile for Family Funds as it has a sound regulatory environment, is tax neutral^[1] stable and boasts modern investment products offered by quality service providers. Additionally, Cayman’s common law legal system provides comfort, certainty and protection for investors.   Cayman is also appealing as a domicile for Family Funds for reasons which are largely dependent on the features of the HNWIs domicile of origin.

Cayman’s Business Friendly Environment

Cayman provides a business friendly, politically stable environment to HNWIs of all nationalities and language groups. In fact, Cayman’s service providers are known to quickly adapt to global shifts and demands. For example, many Cayman service providers provide dedicated language desks manned by professionals who are fluent in the language of their clients.

Availability of Diverse and Flexible Structures

Cayman Family Funds may be structured as companies, partnerships or trusts, each of which provides protection for HNWIs by limiting investor exposure to fund liabilities.  This is especially appealing for HNWIs domiciled in some Latin American jurisdictions such as Brazil where funds are condominiums, with collective ownership of assets and unlimited liability applicable to investors. Cayman Family Funds are also not restricted with respect to asset type, asset concentration or strategy which may be employed. Additionally, Cayman Family Funds may be structured as segregated portfolio companies so that in the event that family members consolidate their holdings, individual investors may have individual segregated portfolios, managers and custodians and benefit from statutory segregation of assets and liabilities of the various segregated portfolios.

Ability to register Family Funds

Many HNWIs have a preference for investment vehicles which are registered with a recognised regulatory body. Cayman’s investment funds regulator, the Cayman Islands Monetary Authority (“CIMA“) so qualifies with its full IOSCO membership and stellar record as a quality regulator. Family Funds can be registered with CIMA and though many such funds will qualify for exemption from registration under applicable law^[2], many HNWIs opt for registration as this gives substance to the structures in dealings with counterparties and domestic authorities.

Confidentiality

For HNWIs, it is important that details of their personal wealth and investment choices remain private. Investment through Cayman Family Funds provides great comfort in this regard. Information reported to CIMA by registered Family Funds (such as names of directors) is not made public and financial reporting is limited to annual audited financial statements which are also kept confidential.

Tax Mitigation

Depending on the domicile of origin of the HNWI, a Family Fund may facilitate tax efficient overseas and round-trip investment and may also be more advantageous as an investment vehicle than traditional overseas holding companies.

Asset protection 

HNWIs who are resident in some Latin American countries fear forced nationalisation of private property and state powers to freeze assets of individuals who are directors of, or connected to, insolvent companies. One way in which investors may guard against such appropriation is by placing assets in a Cayman Family Fund.

The post Private Family Funds appeared first on EdMills LawFirm - Cayman Islands Law Firm.

Legislation applicable

Companies Act (2022 Revision) of the Cayman Islands (the “Law“).

Redomiciliation Process

Registration on transfer by way of continuation (“Transfer BWOC“).

Authority to which application for Transfer BWOC must be submitted

The Registrar of Companies (“ROC“)
P.O. Box 123
Grand Cayman KY1 – 9000
Cayman Islands
Tel: +1 (345) 946-7922
Website: www.ciregistry.gov.ky

Pre-requisites of non-Cayman entity for Transfer BWOC

An entity wishing to transfer to Cayman as an exempted company limited by shares (the “Transferring Entity”) must:

• be a body corporate, incorporated, registered or existing with limited liability;
• have a share capital; and
• be incorporated, registered or existing in a jurisdiction (the “Relevant Jurisdiction“) whose laws permit or do not prohibit the Transfer BWOC of the Transferring Entity.

On registration the ROC must be satisfied that the Transferring Entity is constituted in or substantially in a form which could have been incorporated as an exempted company limited by shares under the Law. 

Conditions for Transfer BWOC

• The name of the Transferring Entity must be acceptable to the ROC otherwise the Transferring Entity must undertake to change the name within 60 days of registration.
• Payment of the registration fee (see section “Fees“).
• Filing with the ROC, notice of the address of the proposed registered office of the Transferring Entity in Cayman.
• ROC must be satisfied that it is not against the public interest to register the Transferring Entity.
• Issue of any licence which the Transferring Entity may be required to hold to carry on its business in or from Cayman.

Documents to be delivered to ROC with an application for Transfer BWOC

• Certified copy of the Transferring Entity’s certificate of incorporation or formation or equivalent document, issued by the relevant authority in the Relevant Jurisdiction (the “Relevant Authority“);
• Certificate of good standing for the Transferring Entity issued by the Relevant Authority OR director’s declaration that the Transferring Entity is in good standing^[1];
• Certified copy of the constitutional documents (howsoever called) of the Transferring Entity as required to be filed in the Relevant Jurisdiction;
• List of names and addresses of the directors and officers of the Transferring Entity;
• Declaration by a director that the Transferring Entity’s operations will be conducted mainly outside the Cayman Islands;
• Undertaking by a director that notice of the transfer will be given to all secured creditors within 21 days; and
• Declaration or affidavit by a director (which shall include a statement of assets and liabilities of the Transferring Entity) that, having made due enquiry, the director is of the opinion that:
  • no petition or other similar proceeding has been filed and remains outstanding or order made or resolution adopted to wind up or liquidate the Transferring Entity in any jurisdiction;
  • no receiver, trustee, administrator or other similar person has been appointed in any jurisdiction and is acting in respect of the Transferring Entity, its affairs or its property or any part thereof;
  • no scheme, order, compromise or other similar arrangement has been entered into or made in any jurisdiction whereby the rights of creditors of the Transferring Entity are and continue to be suspended or restricted;
  • the Transferring Entity is able to pay its debts as they fall due;
  • the application for registration is bona fide and not intended to defraud existing creditors of the Transferring Entity;
  • any consent or approval to the transfer required by any contract or undertaking entered into or given by the Transferring Entity has been obtained, released or waived, as the case may be;
  • the transfer is permitted by and has been approved in accordance with the charter documents of the Transferring Entity;
  • the laws of the relevant jurisdiction with respect to transfer have been or will be complied with; and
  • the Transferring Entity will, upon registration hereunder, cease to be incorporated, registered or exist under the laws of the relevant jurisdiction.

Provisional registration

On payment of a fee, a Transferring Entity may apply to be provisionally registered where it satisfies the requirements other than:

• third party consents, corporate approvals or notices to creditors;
• compliance with the laws of the Relevant Jurisdiction with respect to the transfer;
• the grant of any business licence;
• Transfer is permitted and approved by the charter documents of the Transferring Entity; and

• the application is not intended to defraud creditors.

A Transferring Entity which is provisionally registered must in January of each year pay a fee and file a director’s declaration or affidavit with ROC as regards its’ solvency and constitutional form.

Registration

On registration the ROC will issue a certificate of registration by way of continuation as an exempted company and enter the Transferring Entity in the Register of Companies. The Transferring Entity shall thereafter continue as a body corporate for all purposes as if incorporated and registered as an exempted company under and subject to the Law.

The Transfer BWOC to Cayman will not operate to:

• create a new legal entity;
• prejudice or affect the identity or continuity of the Transferring Entity as previously constituted;
• affect the property of the Transferring Entity;
• affect any appointment made, resolution passed, or any other act or thing done in relation to the Transferring Entity pursuant to a power conferred by any of the charter documents of the Transferring Entity or by the laws of the jurisdiction under which the Transferring Entity was previously incorporated, registered or existing;
• except to the extent provided in the Law, affect the rights, powers, authorities, functions and liabilities or obligations of the Transferring Entity or any other person; or
• render defective any legal proceedings by or against the Transferring Entity and any legal proceedings that could have been continued or commenced by or against the Transferring Entity before its registration.

Post registration Requirements

If the constitutional documents of the Transferring Entity do not comply with Cayman law the Transferring Entity must amend them within 90 days following registration.

Registration and Annual Fees

The fee on registration and annual fees are charged by reference to authorised capital.  The minimum fee is US$731.71 for authorised capital under US$50,000 and the maximum is US$3,009.76 for authorised capital exceeding US$2 million.

The provisional registration fee is approximately US$1,830 and the annual fee for a provisionally registered company is US$1,220.

The post Fact Sheet – Redomiciliation of a non-Cayman body corporate in the Cayman Islands appeared first on EdMills LawFirm - Cayman Islands Law Firm.