The Securities Investment Business (Amendment) Law, 2019 (SIB Amendment) was posted on 18 June 2019.
The SIB Amendment consists of several amendments to the Securities Investment Business Law (2019 Revision) (SIBL) in response to the Caribbean Financial Action Task Force’s evaluation of Cayman’s anti-money laundering framework and the Cayman Islands Monetary Authority’s (CIMA) evaluation of the Excluded Person regime under SIBL.
The amendments will affect humans who’re currently registered with CIMA as Excluded Persons beneath SIBL and broadens the scope of the regulatory and supervisory framework for men and women carrying out securities investment enterprise. Background – SIBL and the Excluded Persons Regime
SIBL regulates the conduct of positive securities funding sports, together with dealing in, arranging offers in, managing or advising on, securities in or from in the Cayman Islands. SIBL applies to Cayman Islands organizations and partnerships and overseas businesses registered inside the Cayman Islands which engage in “securities funding commercial enterprise” in or within the Cayman Islands.
Before the SIB Amendment, if SIBL carried out to an entity and its sports, then that entity became required to both:
observe to CIMA for a full license underneath SIBL; or
sign in as an “Excluded Person” if the entity fell within certain exemptions from the requirement to keep a license (the sizeable majority of entities engaging in securities investment commercial enterprise in or from inside the Cayman Islands were registered as Excluded Persons instead of acquiring a complete license).
The following classes of persons had been authorized to sign up as an Excluded Person instead of observing for a complete license:
a collection enterprise that includes on securities investment enterprise exclusively for one or greater corporations within the equal group;
a person who includes on securities investment business exclusively for classy folks (i.E. A listed or regulated entity, or an experienced investor that invests extra than US$one hundred,000 in line with the transaction), excessive internet worth humans (i.E. An man or woman with a net worth of at least US$a million or a prison individual with general belongings of at the least US$five,000,000) or entities whose buyers are either sophisticated humans or excessive net well worth people; or
an enterprise regulated using a regarded regulatory authority within u. S. Wherein the securities investment commercial enterprise is being conducted.
Entities dealing with or advising investment budget might usually fall within 1.-3. Above.
Excluded Persons were required to make an annual exemption submitting and pay an annual rate to CIMA (presently US$6,098). No different fillings have been required of Excluded Persons under SIBL.
Impact of the SIB Amendment
As a result of the SIB Amendment:
Excluded Persons are required to provide CIMA with certain anti-cash laundering/counter-terrorism information by 15 August 2019 with the aid of completing bureaucracy AIR-157-seventy five and ARC-158-seventy five (Campbells have prepared editable variations of these forms and sent them to registered office customers);
Excluded Persons now are called “Registered Persons” for the functions of SIBL;
modern-day Excluded Persons will need to re-register as Registered Persons using 15 January 2020. The registration necessities require CIMA to be satisfied that the applicant’s shareholders, administrators and senior officials are suits and right humans, which may additionally require the supply of personal questionnaires and different documents for such individuals. No steering has been issued yet but Campbells will offer a replacement in due route;
Registered Persons will want to report an annual statement via 15 January every 12 months starting 2020;
a Registered Person will also be required to:
notify CIMA within twenty-one days of ceasing to carry on securities funding business;
notify CIMA within twenty-one days of any material change in the information filed with the aid of it in its application or annual statement;
notify CIMA of any difficulty of shares (if an employer) or hobbies (if a partnership) and, in which issued, any voluntary disposal of such shares or interests (along with a useful interest therein) inside twenty-one days of the transferor disposal;
notify CIMA of any modifications in senior officials of a Registered Person inside twenty-one days of the switch or disposal;
trade its call if CIMA considers it probable to misinform or deceive or if it consists of any prescribed word or expression; and
one after the other account for every customer’s finances and belongings and that of the Registered Person.
Governance necessities were brought, including the requirement to have the correct range of administrators, partners or managers (as the case can be) appointed. This calls for all Registered Persons which might be companies to have as a minimum two individuals as directors or one corporate director, all Registered Persons that are constrained legal responsibility agencies to have at the least two managers, and all Registered Persons which can be exempted constrained partnerships to have at the least two directors (or equivalent officers) of the general companion or, in which a preferred companion is any other exempted confined partnership, of the final popular accomplice;
fashionable companions of exempted confined partnerships and unmarried own family offices, in conjunction with different restrained classes of humans (basically Government our bodies and positive folks who behavior securities funding commercial enterprise ancillary to their primary enterprise and who are not one by one remunerated), are in particular exempt from needing to check in as a Registered Person, but are the problem to the Cayman Islands’ anti-money laundering regime; and
the categories of humans who can be licensed or registered to behavior securities funding enterprise are Cayman Islands businesses and partnerships, overseas companies registered within the Cayman Islands, limited legal responsibility companies (shaped and registered underneath the Limited Liability Companies Law (2018 Revision)) and restrained legal responsibility partnerships (fashioned and registered under the Limited Liability Partnership Law, 2017).
CIMA could have broader supervisory and enforcement powers such as the strength to refuse or revoke the registration of a Registered Person, to impose conditions on it, to direct it to end and desist from risky or unsound practices, and to request statistics as to its securities investment business.
Going ahead, entities falling inside the definition of “Registered Person” under SIBL will need to consider CIMA’s registration and continuing reporting necessities.
The International Tax Co-operation (Economic Substance) Law, 2018 (ESL) has brought certain reporting and financial substance requirements for “applicable entities” engaging in “applicable activities,” consisting of fund control business.
As a result of the SIB Amendment, the ESL will apply to a Registered person mission fund management commercial enterprise.
We suggest that you contact your regular touch at Campbell’s to consider the impact of the ESL and how exceptional to comply going forward.