Solid leadership

10-04-2014

Although the global financial landscape is changing rapidly, Cayman is in a better position than ever to respond and continue to attract sound business, says the Hon Wayne Panton, Minister of Financial Services, Commerce and Environment.

The Cayman Islands is already known for our legal and regulatory integrity regarding hedge funds, and we are further solidifying our leadership role in the sector via legislation that will increase our attractiveness for fund structures, and continue our practice of appropriate response to global regulatory initiatives.

Our Exempted Limited Partnership Law will be replaced by a new version to enhance our position as a domicile for partnership formation, particularly regarding establishing parallel fund structures with Delaware investment vehicles.

In March, the Cabinet approved the Directors Registration and Licensing Bill 2014, paving the way for its hearing in the Legislative Assembly in April. This legislation, which intends to introduce a registration and licensing regime, will cover directors of regulated mutual funds, and excluded persons under the Securities Investment Business Law (2011 Revision).

The bill is a regulatory response to global developments in corporate governance, and it will address investors’ increasing expectations of fund directors.

The bill is a regulatory response to global developments in corporate governance, and it will address investors’ increasing expectations of fund directors. Discussions on the bill’s content involved the Cayman Islands Monetary Authority (CIMA), the Cayman Islands Directors Association, and other senior industry representatives.

In the last issue of Cayman Funds, the government outlined its progress on FATCA. This year we can report substantial movement following the signing of US FATCA and the UK’s FATCA-type agreements in fall 2013.

Since FATCA is an automatic exchange of information initiative, the government convened a private-public working group to help develop our legal framework for such exchange of information for tax purposes. Its members have remained on track to provide recommendations regarding draft primary legislation, which is to be presented to the Legislative Assembly during its May session.

From an industry communications standpoint, the working group is also issuing advisories; for example, as of this writing the industry has benefited from advisories on FATCA registration and the responsible officer role. This communication helps foreign institutions in Cayman to understand, and therefore fulfil, their responsibilities.

These legislative advancements are an extension of Cayman’s continuing efforts in the funds sphere and they include amendments to the Monetary Authority Law. Effective as of July 2013, this revision allows CIMA to enter into memoranda of understanding with its EU counterparts, using a model memorandum of understanding developed by the European Securities Markets Authority.

The Cayman Islands advantage includes the quality of our service providers (attorneys, mutual fund administrators, directors, trust companies, company managers, etc), which gives fund promoters assurance that they have access to high quality services regardless of the complexity of their products.

Furthermore, there are no direct corporation, capital gains, income, profits or withholding taxes, which facilitates the pooling and maximisation of investment funds from multiple jurisdictions; and we are privileged to have a respected legal and court system, which allows ultimate appeal to the Privy Council in London.

While often a cliché, in the case of Cayman and its performance in the funds sector, it is true that success breeds success. By the end of December 2013 CIMA reported 11,379 funds, an increase of about 5 percent over 2012’s total.

While the global landscape is changing rapidly, Cayman is in a better position than ever to attract sound business. Government and the private sector have a reinforced relationship, through the signing of a memorandum of understanding with Cayman Finance, the largest industry association in the Islands. Together we are planning for our continued success as a cooperative, transparent jurisdiction.

Hon Wayne Panton, Exempted Limited Partnership Law, FATCA, Legislation, CIMA

Cayman Funds