The Director Registration and Licensing Act, as amended (Act) applies to directors of a covered entity, which is defined as:
a company to which paragraphs 1 and 2 of Schedule 4 of the Securities Investment Business Act (Revised) (SIB Act) apply, or
a mutual fund regulated under the Mutual Funds Act (Revised)
In summary, the Act covers all directors of Cayman registered mutual funds and certain vehicles carrying on securities investment business, including most Cayman investment management and investment advisory companies, regulated or registered with the Cayman Islands Monetary Authority (CIMA). It requires directors of such entities to be registered with or licensed by CIMA.
The Act does not affect directors of other types of Cayman companies, for example finance SPVs, portfolio acquisition companies and other private holding or subsidiary companies which are not covered entities regulated by or registered with CIMA.
Ongoing requirements
Annual fees
Registered, professional and corporate directors have to pay annual fees to CIMA to maintain their respective registrations or licenses. Such fees must be paid on or before 15 January in each calendar year to avoid penalties.
Insurance coverage
The Act requires that professional directors and corporate directors be covered by insurance against loss arising from claims in respect of civil liability incurred in connection with business of the professional/corporate director. Such insurance must have a minimum aggregate cover of US$1.25m and minimum cover of US$1.25m for each and every claim.
There is no requirement under the Act for registered directors to maintain insurance coverage.
Notification of changes and administrative fines
If there is any change to the information provided to CIMA in an application for registration or the grant of a license under the Act, the relevant director is required to inform CIMA within 21 days of the change. Again, there is no materiality threshold and penalties may become payable under Cayman's administrative fines regime, whereby CIMA may impose significant administrative fines upon individuals and entities who are in breach of certain prescribed regulatory laws including various provisions under the Act.
Surrender or cancellation of registration
A director that has ceased to be appointed as a director for any covered entity (either due to the resignation of the director or if the covered entity has completed de-registration with CIMA) and does not intend to act as a director of a covered entity in the future may surrender or cancel their registration.
CIMA's powers
CIMA has extensive powers of inspection and inquiry under the Act. CIMA may also cancel, suspend or revoke the registration/license of a director and may impose such conditions as it thinks fit.
Bell Rock Group Director Services
Bell Rock is a leading provider of professional director services. Licensed and regulated by CIMA since 2013. We act for many different types of entities in the Cayman Islands such as hedge funds, crypto funds, venture capital funds, private equity funds, investment management companies, investment advisors, virtual asset service providers and Cayman foundations used as wrappers for decentralized autonomous organizations and holding companies. Our directors have over 30 years of senior level industry experience.
Should you require any assistance in registering as a director or wish to appoint an professional director from Bell Rock, please feel free to contact us.
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