The Directors Registration and Licensing Law, 2014 now in force following publication of The Directors Registration

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1 BERMUDA BRITISH VIRGIN ISLANDS CAYMAN ISLANDS DUBAI HONG KONG LONDON MAURITIUS SINGAPORE conyersdill.com The Directors Registration and Licensing Law, 2014 now in force following publication of The Directors Registration and Licensing (Registration and Licensing) Regulations, 2014 The Directors Registration and Licensing Law, 2014 (the Law ) is now in force 1 following publication in the Cayman Islands Gazette of The Directors Registration and Licensing (Registration and Licensing) Regulations, As explained in our May 2014 Article, the Law provides that those persons acting as directors of a covered entity must register with, or obtain a licence from, the Cayman Islands Monetary Authority ( CIMA ). For this purpose a covered entity means a mutual fund regulated under the Mutual Funds Law and certain Excluded Persons under the Securities Investment Business Law. There are three classes of directors which will be regulated: (1) registered directors who comprise natural persons appointed as directors to fewer than twenty covered entities; (2) professional directors, who comprise natural persons appointed as directors for twenty or more covered entities; and (3) corporate directors, comprising bodies corporate appointed as directors for any covered entity. 1 The Law comes in to effect on 4 June 2014 pursuant to The Directors Registration and Licensing Law, 2014 (Commencement) Order, 2014 with the exception of Sections 11(2)(a), 18(2)(a) and 24(1)(b) which shall come in to force at a later date. These sections require CIMA to consider the capacity of the applicant professional director and or a corporate director before granting a licence. Further, section 24(1)(b) requires CIMA to examine the capacity of registered directors, professional directors and corporate directors to carry out their duties and responsibilities of directors of covered entities.

2 The Law applies to each category whether or not the director is resident in the Cayman Islands. Registered Directors Those natural persons seeking to be appointed as a director of a covered entity for the first time, on or after 4 June 2014, are required to be registered with CIMA as a registered director in advance of taking up the position. Natural persons currently acting as directors of covered entities will have three months from the 4 June 2014 (the date of the commencement of the Law) to register with CIMA as a registered director. A registered director is required to pay an application fee of US$ together with a fee of US$ upon application to be registered and then an annual fee thereafter of US$ A fee of US$ is payable on surrender of registration. As part of the application process the registered director must provide CIMA with the following information: (i) (ii) (iii) (iv) (v) the full name, date of birth, nationality and country of birth of the applicant; the address of the principal residence of the applicant and the applicant s postal address if it is different; details as to whether the applicant has ever been convicted of a criminal offence involving fraud or dishonesty; details as to whether the applicant has ever been the subject of an adverse finding, financial penalty, sanction or disciplinary action by a regulator, self-regulatory organisation or professional regulatory body; and the names and registration numbers of the covered entities for which the applicant acts or proposes to act. Page 2 of 7

3 Professional Directors 2 Those persons seeking to be appointed as a professional director of a covered entity for the first time, on or after 4 June 2014, are required to be licensed with CIMA in advance of taking up the position. Persons currently acting as professional directors of covered entities will have three months from the 4 June 2014 (the date of the commencement of the Law) to obtain a licence. A professional director is required to pay an application fee of US$ together with a fee of US$3, upon application to be licensed and then an annual fee thereafter of US$3, The fee for surrender of a professional director licence is US$ As part of the application process the professional director must provide CIMA with the following information: (i) (ii) (iii) (iv) (v) the full name, date of birth, nationality and country of birth of the applicant; the address of the principal residence of the applicant and the applicant s postal address if it is different; personal details in the form of a questionnaire prepared by CIMA; not less than three references acceptable to CIMA, including one character reference and one reference verifying the good financial standing of the applicant and a police or other certificate from a source acceptable to CIMA that the applicant has not been convicted of a serious crime or any offence involving dishonesty; the names and registration numbers of the covered entities for which the applicant acts or proposes to act; and 2 A director of a covered entity who is a natural person and is a director, employee, a member, an officer, a partner, or a shareholder of a holder of a companies management licence or a mutual funds administrators licence is not required to be licensed as a professional director but is required to register as a registered director. A director of a covered entity who is a natural person and is a director, employee, a member, an officer, a partner, or a shareholder of a fund manager of a mutual fund regulated under the Mutual Funds Law and that fund manager is registered or licensed by a prescribed overseas regulatory authority, is not required to be licensed as a professional director if the person acts as a director of a covered entity by virtue of the person s relationship to that fund manager and is registered as a registered director. Page 3 of 7

4 (vi) evidence of insurance coverage (minimum aggregate cover of one million dollars and a cover of one million dollars for each and every claim). Corporate Directors 3 Those companies seeking to be appointed as a corporate director of a covered entity for the first time, on or after 4 June 2014, are required to be licensed with CIMA in advance of taking up the position. Companies currently acting as corporate directors of covered entities will have six months from 4 June 2014 (the date of the commencement of the Law) to obtain a licence. A corporate director is required to pay an application fee of US$ together with a fee of US$8, upon application to be licensed and then an annual fee thereafter of US$9, The fee for surrender of corporate licence is US$ As part of the application process the corporate director must provide CIMA with the following information: (i) (ii) (iii) (iv) (v) if a foreign registered company under the Companies Law, the names and addresses of one or more persons authorised to accept service on its behalf or notices; evidence of the company s incorporation; the names and registration numbers of the covered entities for which the applicant acts or proposes to act; the full names, addresses and nationalities of all directors, managers and officers of the company; the full names, addresses and nationalities of each shareholder who holds more than ten per cent of the company s issued share capital or total voting rights; 3 A holder of a companies management licence or a mutual fund administrators licence providing directors to or acting as a director for a client which is a covered entity is not required to be licensed as a corporate director. Page 4 of 7

5 (vi) (vii) (viii) (ix) (x) (xi) (xii) personal details, to be provided by all of the directors, managers and officers of the company, in the form of a questionnaire prepared by CIMA; personal details of persons holding more than ten per cent of the company s issued share capital or total voting rights, in the form of a questionnaire prepared by CIMA; not less than three references acceptable to CIMA verifying the good character and financial standing of each director, manager and officer of the company and each shareholder and each beneficial shareholder who is a natural person holding more than ten per cent of the applicant s issued share capital or total voting rights; police certificates for each director, manager, officer and shareholder; certified and authenticated copy of the constitutional documents (translated as appropriate); the names and addresses of the principal and registered offices of all parent companies and all subsidiary companies of the company; a certificate of good standing from all parent companies and all subsidiary companies of the company licensed or registered by an overseas regulatory authority; and (xiii) a certificate of good standing from all overseas regulatory authorities that regulate the company; and(xiv) evidence of insurance coverage (minimum aggregate cover of one million dollars and a cover of one million dollars for each and every claim). Companies that are not ordinary companies, ordinary non-resident companies, exempted companies or foreign registered companies under the Cayman Islands Companies Law are not eligible to qualify as a corporate director. Accordingly, any foreign corporate entity currently acting as a director of a covered entity and or wishing to take up the position of a corporate director of a covered entity will need to register first as a foreign entity under Part IX of the Companies Law and then apply for a licence. Page 5 of 7

6 Licensing and Registration in practice Web Portal Application and payment for registration and licensing will be processed through CIMA s online registration portal. CIMA will issue a unique identification number to each director and it will be that number that the director will use to log on to the web portal. CIMA anticipate that it will take up to 48 hours to approve and register a registered director. However, professional directors and corporate directors respectively will receive confirmation of their licence within four weeks. Directors will be required to update CIMA within 21 days in the event there is a change to the information provided to CIMA. At the time of filing the annual return the director will be required to confirm that there are no changes to the information provided in the application. Information obtained by CIMA as part of the registration and licensing process will not be publicly available. However, the public will be able to search for the director s name and to see whether the director has been registered or licensed in accordance with the Law. Next Steps Potential new directors (whether registered directors, professional directors or corporate directors) of covered entities should seek advice and take steps to register with CIMA immediately. For existing directors of covered entities, once in receipt of your unique identification number you should take steps to register or apply for a licence as applicable, and within the specified time frame. For additional information, please contact your usual Conyers Dill & Pearman representative or one of the following attorneys. Kevin Butler Shareholder, Head of Cayman Office kevin.butler@conyersdill.com Page 6 of 7

7 Gene DaCosta Shareholder Tania Dons Shareholder Craig Fulton Shareholder This article is not intended to be a substitute for legal advice or a legal opinion. It deals in broad terms only and is intended to merely provide a brief overview and give general information. About Conyers Dill & Pearman Founded in 1928, Conyers Dill & Pearman is an international law firm advising on the laws of Bermuda, the British Virgin Islands, the Cayman Islands and Mauritius. With a global network that includes 140 lawyers spanning eight offices worldwide, Conyers provides responsive, sophisticated, solution-driven legal advice to clients seeking specialised expertise on corporate and commercial, litigation, restructuring and insolvency, and trust and private client matters. Conyers is affiliated with the Codan group of companies, which provide a range of trust, corporate secretarial, accounting and management services. Page 7 of 7