CAYMAN ISLANDS Law and Practice Contributed by: Sailaja Alla, Matt Mulry, Maree Martin and James Mossetto, Appleby
securities investment business activity (which would typically include activity undertaken by investment managers) in or from the Cayman Islands. SIBA regulates dealing in, arranging, managing or advising on securities, which are broadly defined and include shares, futures, options, swaps and contracts for differences. Anyone carrying on “securities invest - ment business” must apply to CIMA for a licence unless they can rely on an exemption. Exemption from licensing is available if services are to be provided by a Cayman Islands investment manager solely to funds falling within the following categories of persons: • sophisticated persons (ie, persons regulated by CIMA or regulated by a recognised overseas regulatory authority, or any of whose securities are listed on a recognised securities exchange or who are reasonably to be regarded as capable of evaluating the merits of a proposed transaction and who invest at least USD100,000 in each single transaction); • high net worth persons (ie, individuals whose net worth is at least USD1 million or persons that have total assets of at least USD5 million); and • entities whose investors are either sophisticated persons or high net worth persons. Although a licence is not required for the above- listed exemptions, there is a requirement to register with CIMA and to update such registration annually. Cayman Islands funds managers are also required to comply with anti-money laundering obligations and, unless an exemption applies, with FATCA/CRS obliga - tions under Cayman Islands law. SIBA registered fund managers should also comply with CIMA-published rules and statements of guid - ance and have in place policies and procedures in respect of: • corporate governance; • cybersecurity; • international financial sanctions; • internal controls; • nature, accessibility and retention of records;
• outsourcing arrangements; and • succession planning.
There are no current registration/licensing require - ments for parties conducting securities investment business who are not Cayman Islands entities and who are not conducting securities investment busi - ness from an established place of business in the Cay - man Islands. No specific disclosures are required for Cayman Islands fund managers, but a Cayman Islands fund’s offering documents are required to include: • any material involvement by the manager in the calculation, determination or production of the fund’s net asset value or pricing of the fund’s port - folio; • information concerning the manner, amount and/or calculation of remuneration paid to the manager; • the names and biographies of the manager’s direc - tors; and • the material provisions of the investment manage - ment agreement. Beneficial Ownership Regime BOTA requires all legal persons (which would include Cayman incorporated or registered fund managers) to maintain a BOR, including certain required particulars in respect of their beneficial owners. A fund manager that is licensed under SIBA would be able to benefit from an alternative route to compliance and provide details of the regulatory law under which it is licensed rather than maintain a BOR. Beneficial owners are individuals, Cayman Islands entities or, as applicable, trustees of trusts that: • directly or indirectly own or control 25% or more of the shares, voting rights or partnership interests; • exercise ultimate control over the management of the entity; or • exercise control through other means. Where no such registrable beneficial owner can be identified, a senior managing official should be includ - ed on the BOR as the contact person (ie, a director or chief executive officer).
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