CAYMAN ISLANDS Law and Practice Contributed by: Agnes Molnar, Jason Ta, Paul Walters and Gemma Walters, Travers Thorp Alberga
4.11 Activities Avoided by SPEs or Other Securitisation Entities Regulatory requirements must be thoroughly assessed in each transaction to ensure the com - pliance of the transaction with, amongst other matters: the AMLRs, sanctions laws and regula - tions; data protection legislation; beneficial own - ership reporting obligations; and CRS/FATCA obligations. Under Data Protection Legislation, the SPE acts as data controller and has obliga - tions with respect to the processing of personal data by both the SPE itself and its affiliates and delegates. 4.12 Participation of Government- Sponsored Entities There is no economic participation in the secu - ritisation markets by Cayman Islands govern - ment-sponsored entities at this time. 4.13 Entities Investing in Securitisation See 2.6 Investors. 4.14 Other Principal Laws and Regulations Because of their structure, securitisation SPEs that are not insurance securitisation vehicles are generally not required to be registered or licensed by CIMA under any regulatory law. However, securitisation transactions may nev - ertheless present money laundering/terrorist financing/proliferation financing risks. CIMA has therefore issued sector-specific guidance titled the “Guidance Notes Amendment (Securitisa - tion), May 2021”, which is applicable to non- insurance SPEs and the parties that provide services to such SPEs. The SPE will be carrying on relevant financial business under the POCA, and will therefore be required to comply with the AMLRs. The SPE may delegate or outsource the performance of
• covenants in the transaction documents not to engage in any businesses or activities other than those necessary for its role in the transaction; • debt limitations; • separateness covenants; • creation of security interest over assets; and • limitations on reorganisation or changes of ownership and shareholder restrictions. 4.6 Treatment of Securitisation in Financial Entities In respect of any Cayman Islands-based finan - cial entity investing in securitisation positions, there are no special rules under Cayman Islands law governing capital or liquidity treatment with respect thereto. 4.7 Use of Derivatives There are no specific laws in the Cayman Islands regarding the use of derivatives. 4.8 Investor Protection See 2.6 Investors . 4.9 Banks Securitising Financial Assets A financial institution outside of the Cayman Islands originating receivables to be securi - tised will be subject to the rules concerning the origination and servicing of such assets in the jurisdiction of its incorporation and usually the jurisdiction within which such receivables are located. The rules that are applicable will depend on asset type, borrower type and the governing law of the receivables. 4.10 SPEs or Other Entities Cayman Islands law does not prescribe a spe - cific form of securitisation vehicle. The Cayman Islands courts will generally give effect to lim - ited recourse provisions that are legal, valid and binding under the relevant applicable law.
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