During 2019 the Cayman Islands has made a tremendous push to become internationally compliant with numerous laws in Cayman being amended and/or enacted to give effect to such changes. During the final quarter of 2019 and into 2020 further regulation with respect to investment funds is being considered by the Cayman Islands Ministry of Finance.
Below, we have highlighted some of the important changes taking place in the Cayman Islands.
New Data Protection Law
At the end of September 2019, the Cayman Islands Data Protection Law (“DPL”) came into force. The DPL sets out the rights of individuals to control their personal data and implements a system to protect against misuse of that data. The DPL broadly reflects the substantive elements of the EU General Data Protection Regulation (“GDPR”).
AMS Cayman is committed to ensuring full compliance with DPL.
In order to demonstrate a more substantive connection to the jurisdiction (with “investment funds funds” currently excluded from the regime), Cayman Islands entities are required to show substance in the jurisdiction. We believe that Cayman holding companies and Cayman-based investment fund managers, who are not currently tax resident outside of the Cayman Islands, will be the most heavily impacted by this legislation.
Each case must be assessed individually in connection with the Cayman company’s CIGA (core income generating activities). We recommend that every Cayman Islands entity review the legislation along with corresponding guidance notes and other helpful documents. The first filing regarding Economic Substance must be made prior to submitting each Company’s annual return which is due by January 31, 2020.
Cayman companies currently registered as “excluded persons” (which are now considered “registered persons”) under the Securities Investment Business Law (2019 Revision) (“SIBL”) should now be considering various options with local Cayman counsel and international tax advisers with regard to the impact of the International Tax Co-operation (Economic Substance Law) 2018 (the “ESL”) and SIBL amendments ahead of the 15 January 2020 re-registration date.
We offer a full range of Economic Substance solutions tailor made to the requirements of each client. Should you be interested, please do not hesitate to contact email@example.com.
Updates to the Register of Members
Section 40 of the Companies Law (Revised) was recently updated and included an additional requirement stating that the register of members of a Cayman Islands company specify, with respect to each category of shares, whether such category of shares carries voting rights and, if so, whether such voting rights are conditional. AMS Cayman, as a company’s registered office, is responsible for preparing and updating the registers of members for all Cayman company clients.
If a company was incorporated or registered after 8 August 2019 it must comply on or before 7 November 2019 and, if already incorporated or registered on or before 8 August 2019, it will be required to comply prior by 7 February 2020.
Beneficial Ownership Regime
Pursuant to the Companies Law Amendment, the Limited Liability Company (LLC) Law Amendment and the Limited Liability Partnership (Amendment) Law, 2019 the penalties for failure by a Cayman entity to establish or maintain its beneficial ownership register, be in compliance with notices and provide required information have been increased. The maximum prison term has remained the same, however fines have been increased to a maximum of US$120,000.
Information on Directors of Cayman Companies
In accordance with Section 5 of the Companies Amendment Law and Section 3 of the LLC Law Amendment, from October 1, 2019, members of the public will be able to visit new Company Information Kiosks in the lobby of the Government Administration Building. There they will be able to view a list of names of the current directors and alternate directors of a company incorporated in the Cayman Islands and a list of names of the current managers of a limited liability company.
The Registrar will be responsible for overseeing the viewings and each request will be required to be carried out in person, with an administrative fee of US$62 payable to the Cayman Islands Government.
Changes to the Register of Directors and Officers
The period within which a Cayman Islands company must notify the Cayman Islands Government/ Registrar of Companies (Registrar) of any changes to its directors and officers has been reduced from 60 days to 30 days. A Cayman company must ensure that it notifies its Cayman registered office provider of any changes to its register of directors, officers or managers in order for the Registrar to be informed within the revised timeline, otherwise penalties will be imposed.
AMS Cayman’s team of highly-skilled regulatory, corporate and legal experts are available to assist you with any queries you may have on any of the topics covered in this communication to ensure that you and your Cayman based vehicle are fully compliant with all regulatory matters.
For further Information, please either reply to this email or contact:
Director of AMS Corporate Services (Cayman) Limited
+1 (517) 213-8096
Wilton McDonald II
Lawyer and Counsel to AMS
+1 305 851- 2549