Fund directors should prepare for new laws


Directors of Cayman corporate regulated hedge funds and start preparing now to ensure they are compliant with new regulations being introduced by the Cayman Islands Government on licencing and registration for directors of Cayman Islands corporate regulated funds, Solomon Harris has warned.

A draft bill is out for industry consultation but the legislation is likely to be enacted soon. The Cayman Islands Monetary Authority (CIMA) is taking this issue seriously and sanctions for failure to comply with the registration and licensing requirements include substantial fines, or even imprisonment, Solomon Harris has warned.

The broad idea behind the bill is that it would bring Cayman regulations in line with international expectations on transparency and on standards of corporate governance. This means they have to abide by international treaties and the requirements of membership of international bodies such as the International Organization of Securities Commissions (IOSCO).

But Solomon Harris also believes the momentum behind the legislation is not driven by international bodies and governments alone. “The quality and conduct of fund directors is also a key issue for investors, as was confirmed by CIMA’s financial services industry survey in January 2013 and other surveys conducted with investors and funds industry professionals,” the firm notes.

The government and CIMA are looking to address those concerns by introducing the Statement of Guidance for directors of Mutual Funds, which will be bolstered by the CIG’s new system of licences and registration of directors.

Solomon Harris has warned that once the bill is passed, there may only be a short transitional period from when it comes into force by the end of which existing directors of corporate funds must be in compliance with the new law.

Solomon Harris, Cayman, Legal, CIMA, IOSCO

Cayman Funds