Thu, Jun 19, 2014
Who is affected?
The Law, currently, only applies to directors of covered entities, referring to companies that:
It does not apply to trustees (who are regulated under the Banks and Trust Companies Law (2013 Revision)) or limited or general partners of partnerships. It also applies to entities currently with the designation “Licence Under Termination” with the Cayman Islands Monetary Authority (“CIMA”) where directors are still appointed to the board. However, most notably, the Law does not apply to covered entities which are in voluntary or official liquidation.
When does the law come into effect?
The Law came into force on 4 June 2014 and requires registration to have been applied for within 3 months thereof and applications for licensing within 6 months thereof. Directors may continue to act until CIMA approves applications for registration or licencing.
How will the law be implemented in reality?
This will be overseen, primarily, by CIMA who will be writing to the registered office of each covered entity and providing them with a list of unique identification numbers for all of the directors that are associated with the covered entities of that registered office. There is then an obligation on the registered office to communicate this information to each director. The registered office will also be required to provide details of the correct website address at which to register.
The process will involve registering and paying the registration fee, and for professional directors applying for a licence, paying the license fee, which is more expensive than the registration fee. Thereafter, annual fees must be paid and, if licensed evidence of insurance needs to be provided.
There are significant penalties, with late payment fees accruing monthly.
Why was the law implemented?
The Law was enacted following responses to CIMA’s proposals set out in its Corporate Governance Consultation Paper dated 14 January 2013 and following feedback provided to a July 2013 CIMA consultation on a proposed Statement of Guidance on Corporate Governance for CIMA regulated mutual funds.
What does this mean as it pertains to liquidation?
Directors should consult with their advisers and carefully consider the timings of their liquidations especially over the next three months.
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