Private Client & Offshore Services, Cayman Islands updates

Getting schooled in Nord Anglia – extra safeguards for companies facing appraisal litigation
Harney Westwood & Riegels
  • Cayman Islands
  • June 07 2018

In Nord Anglia the justice made directions orders regarding the use of keyword searches, the number and scope of information requests, and the conduct of management meetings consistent with the orders made in Xiadu Life Technology. Further, the judgment will provide welcome safeguards for companies facing appraisal litigation in the Cayman Islands if adopted on a wider basis.

Shanda Games: Court of Appeal confirms timing for leave to appeal to Privy Council
Harney Westwood & Riegels
  • Cayman Islands
  • May 31 2018

Appeals to the Privy Council from the Court of Appeal are regulated in the Cayman Islands (Appeals to Privy Council) Order 1984. However, the order does not provide for how to determine the date of a decision. The Court of Appeal recently ruled that for the purposes of an application for leave to appeal to the Privy Council, time runs from the date on which an order is sealed or perfected, not the date on which the judgment is delivered.

Court reaffirms high threshold for case management stays
Harney Westwood & Riegels LLP
  • Cayman Islands
  • May 24 2018

In a recent case, a petition to wind up a company was issued by its majority shareholder. The minority shareholder – a Samoan entity – issued an application to stay the petition on the basis that there were related proceedings in Samoa and held that Samoa was the proper forum in which to argue these matters. The court refused to grant the stay, finding that the high burden imposed in stay applications of this type had not been met.

Proceedings bowled out after unplayable delivery
Harneys
  • Cayman Islands
  • May 17 2018

The Grand Court of the Cayman Islands recently set aside service of proceedings against a foreign defendant, concluding that the plaintiff had abused the court process in pursuing the proceedings and failed to establish that the court should exercise its jurisdiction over the defendant. The court held that the defendant's immunity as the employee of a New Zealand crown entity was an "unplayable delivery" for the plaintiff and weighed heavily against the exercise of the court's exorbitant jurisdiction.

Court of Appeal rules on dissenters' discovery
Harneys
  • Cayman Islands
  • May 10 2018

It has long been argued that no sui generis category of litigants is exempt from the general rules of discovery, which aim to protect the integrity of the litigation process. The Cayman Islands Court of Appeal recently released its decision in the appeal of a directions order, in which the contested issue was whether dissenting shareholders in appraisal actions under Section 238 of the Companies Law are required to give discovery.

Costs of breaching an exclusive jurisdiction clause: BDO Cayman v Argyle Funds
Harneys
  • Cayman Islands
  • May 03 2018

A recent Grand Court of the Cayman Islands decision has confirmed that if a party pursues foreign proceedings in breach of a Cayman Islands exclusive jurisdiction (or similar) clause in a contract, that party faces the prospect of having to pay both the Cayman and foreign litigation costs of the counterparty on the indemnity basis.

Dissenting shareholders: judicial management and e-discovery
Harneys
  • Cayman Islands
  • April 26 2018

In a partial ruling in Xiaodu Life Technology, the Cayman Islands Grand Court ruled on the scope of the company's discovery and the use of keyword searches; whether the number of information requests should be limited; and the number and conduct of management meetings, including whether they should be open or without prejudice.

Primeo: should a liquidator alter register of members?
Harneys
  • Cayman Islands
  • April 19 2018

The Cayman Islands Court of Appeal has held that a liquidator cannot use his or her statutory power pursuant to Section 112(2) of the Companies Law to rectify the register of members where the effect would be to override investors' proprietary rights. It held that the section does not aim to provide for substitution of incorrect net asset value if, despite its incorrectness, it has been calculated in accordance with a member's contractual rights.

Important changes to regulations and compliance for investment funds
Harney Westwood & Riegels
  • Cayman Islands
  • March 15 2018

The recent changes that have been made to the anti-money laundering regime will bring the Cayman Islands into line with international best practice and are a welcome update to the territory's financial services landscape. In reality, the changes will not affect the majority of investment funds using the jurisdiction, but updates to documentation and procedures may be required.

Beneficial ownership regime: some companies now in scope
Harney Westwood & Riegels
  • Cayman Islands
  • January 25 2018

The Cayman Islands has amended the beneficial ownership register regime for Cayman companies and limited liability companies, meaning that some previously out-of-scope companies are now in scope and must maintain a register. In addition, all out-of-scope companies must now file a written confirmation of the basis for their exemption with their corporate services provider, and these providers must regularly file the received beneficial ownership information with the competent authority.

New developments in litigation funding
Harney Westwood & Riegels LLP
  • Cayman Islands
  • January 18 2018

A recent Grand Court of the Cayman Islands ruling represents a significant development for the jurisdiction, opening the door to third-party funding of litigation in the Cayman Islands. However, while the door has been opened, a plaintiff which seeks to commence litigation in the Cayman Islands with funds provided under a funding agreement will need to seek the court's approval of the particular agreement in question.

Anti-money Laundering Regulations for unregulated investment and insurance entities to take effect
Harney Westwood & Riegels LLP
  • Cayman Islands
  • December 14 2017

Under new anti-money laundering legislation, the list of activities classed as relevant financial businesses has been expanded. Unregulated investment funds and some insurance entities have now been given a grace period until May 31 2018 to establish anti-money laundering compliance programmes. This is a welcome move, particularly for unregulated investment funds which were not bound by the preceding regulations and therefore may not have policies and procedures in place.

Foundation Companies Law enacted
Harneys
  • Cayman Islands
  • November 23 2017

The Foundation Companies Law 2017, which recently came into force, approaches the creation of a foundation company in such a way that it may consequently be established for any lawful purpose. The foundation company shares many of its features with other types of Cayman company and fits seamlessly into the Cayman Islands' legal regime. It will therefore have the benefit of a considerable body of case law on companies.

New Anti-money Laundering Regulations come into force
Harney Westwood & Riegels
  • Cayman Islands
  • November 16 2017

The government recently adopted updated Anti-money Laundering Regulations. The regulations demonstrate the Cayman Islands' ongoing commitment to comply with the highest international standards on combating money laundering and terrorist financing and aim to ensure consistency with the Financial Action Task Force 2012 recommendations. The move is part of an overall update of the territory's anti-money laundering regime.

Structuring an ICO through the Cayman Islands
Harney Westwood & Riegels
  • Cayman Islands
  • November 02 2017

It seems that 2017 will be remembered as the year of the initial coin offering (ICO). The Cayman Islands is witnessing an upsurge in ICO-related business and structuring an ICO through the territory remains an attractive proposition. However, ICO-specific guidance is yet to be issued by the government or the regulator, and a number of legal uncertainties remain. Existing statutory and regulatory regimes must therefore be considered when structuring an ICO.

Beneficial ownership regime – an overview
Harney Westwood & Riegels
  • Cayman Islands
  • October 19 2017

Under the Cayman Islands beneficial ownership legislation, certain Cayman companies are required to maintain details of their beneficial owners and relevant legal entities on a beneficial ownership register. Companies should determine whether they are within the scope of the legislation and familiarise themselves with the obligations for in-scope companies and those who hold interests in them.

New Cayman Islands IP regime
Harney Westwood & Riegels
  • Cayman Islands
  • September 07 2017

The Trademarks Law 2016, the Patents and Trademarks (Amendment) Law 2016 and the Design Rights Registration Law 2016 recently came into force, introducing a new IP regime in the Cayman Islands. The legislation establishes a standalone trademark registration system, prohibits the assertion of patent infringement in bad faith and allows existing UK and EU-registered design rights to be extended to the Cayman Islands, among other things.

Introduction to automatic exchange of information for investment funds
Harneys
  • Cayman Islands
  • August 31 2017

As Cayman Islands entities are not directly subject to the so-called 'automatic exchange of information' agreements, the government has introduced legislation to implement these under the Tax Information Authority Law. Guidance notes have also been issued, providing details of the notification, reporting and ongoing obligations that apply, as well as a useful reminder of the differences between the Foreign Account Tax Compliance Act and the Common Reporting Standard.

Automatic exchange of information – further update
Harneys
  • Cayman Islands
  • June 29 2017

The Tax Information Authority (TIA) recently issued further updates on the compliance obligations of Cayman financial institutions. A number of key dates and developments have changed since then, including with regard to TIA registration, the 2017 reportable jurisdictions, liquidation reporting obligations and the phasing out of the UK Crown Dependencies and Overseas Territories International Tax Compliance Regulations.

New beneficial ownership regime to take effect
Harney Westwood & Riegels
  • Cayman Islands
  • June 22 2017

Following lengthy discussions with the UK authorities, the government recently approved new legislation to introduce beneficial ownership registers for certain Cayman companies and limited liability companies. Companies which are subject to direct or indirect regulatory oversight are likely to be exempt from the requirements. All Cayman companies should now review whether they will be required to maintain a beneficial ownership register.

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