The Monetary Authority (Administrative Fines) (Amendment) Regulations 2020 recently came into force, extending the administrative fines regime beyond breaches of the Anti-money Laundering Regulations to a much broader spectrum of breaches under various Cayman regulatory laws. Of particular interest to Cayman bank licensees will be how breaches of the Banks and Trust Companies Law will be treated under the regulations.
The Cayman Islands recently introduced a new framework for regulating virtual asset businesses: the Virtual Assets (Service Providers) Law 2020. The law derives from recommendations made by the Financial Action Task Force and provides for the regulation of virtual asset businesses and the registration and licensing of persons which provide virtual asset services. In addition, the government has amended a number of existing laws to extend to virtual assets.
The COVID-19 pandemic has triggered a number of operational and administrative challenges across the global legal and economic landscape. This article summarises some of the latest developments and the key issues relevant to financial institutions with legal and regulatory links to the Cayman Islands, including the validity and enforceability of electronic signatures and the Cayman Islands advisory on anti-money laundering and countering the financing of terrorism compliance.
To help Cayman hedge funds navigate the myriad issues brought about by COVID-19, this article offers a high-level checklist for fund directors and investment managers to consider. The checklist covers operational issues, issues around liquidity and possible termination and communication and reporting considerations. Each of these topics is considered in turn in relation to a typical standalone corporate open-ended Cayman fund. That said, most of the checks can be applied using a variety of Cayman vehicles.
In light of the COVID-19 pandemic and with many people now working remotely, companies are increasingly considering the use of digital contracts and electronic signatures. To help minimise disruption and ensure business continuity, this article summarises the legal position in the Cayman Islands and provides practical advice on implementation.
The Foundation Companies Law 2017 was a welcome addition to the Cayman Islands legal landscape. The law introduced a brand new legal entity known as the 'foundation company' – a remarkably flexible vehicle that operates like an incorporated trust, allowing it to function like a civil law foundation or common law trust while retaining the separate legal personality and limited liability of a company.
Section 238 of the Companies Law (2020 Revision) provides an avenue through which shareholders of a merged or consolidated Cayman Islands company can apply to have the fair value of their shares determined by the Grand Court. Section 238 has its origins in Delaware law and was first introduced into the Cayman Islands Companies Law in 2009. After a relatively uneventful first few years in operation, Section 238 is now at the forefront of jurisprudence.
The Court of Appeal recently reiterated the importance of following the natural and ordinary meaning of a fund's articles in order to ensure that redemptions are effective. This is particularly important in the context of a master-feeder fund structure. Although the decision is consistent with longstanding authority, it does highlight the importance of ensuring that the redemption procedures set out in a master fund's articles are strictly adhered to as a matter of practice.
In a decision that provides additional certainty to dissenting shareholders, the Grand Court has rejected a company's efforts to recast the procedural framework for appraisal proceedings brought under Section 238 of the Companies Law (as revised). This decision follows the significant 2019 ruling of Chief Justice Smellie in JA Solar, which has become the touchstone for directions orders in Section 238 proceedings.
The government recently approved the Private Funds Bill 2020 and an amendment to the Mutual Funds Law (2020 Revision). The legislation is the result of certain EU and other international recommendations and has been developed to align the Cayman Islands investment fund regulatory regime with those of other jurisdictions. This article summarises the key features of both pieces of legislation.
At the recent Chambers Economic Forum, the Cayman government announced its intention to bring in a much-anticipated new regime governing corporate restructuring by the end of 2020. Until then, with the COVID-19 pandemic pushing many groups into the zone of insolvency, a number of considerations remain relevant to structures involving a Cayman entity.
May 2020 marked the 22nd anniversary of the Cayman Islands segregated portfolio company (SPC). This article reflects on the first two decades of the SPC – in particular, the principles established by the courts concerning insolvent SPCs. These cases have posed some interesting and novel questions for the Cayman courts to resolve and the decisions have fleshed out the statutory provisions as regards the status, duties and powers of office holders appointed in connection with SPCs.
The Court of Appeal has provided much needed clarification of the test for validating certain transactions by companies that are subject to a winding-up petition, pursuant to Section 99 of the Companies Law (2020 Revision). Section 99 operates to help maintain the status quo of a company at the date of a winding-up petition so that the winding-up petition can continue to achieve its purposes.
It has been more than a decade since blockchain – or distributed ledger technology – appeared on the financial services landscape. Yet, it is still capable of generating excitement as its value in transforming processes continues to develop. As blockchain increases its reach and its impact in specific industries grows, this will generate a need for suitable models of insurance. Cayman-based technology companies have expressed interest in buying insurance from local insurers.