Cayman plans more fund oversight

The most popular fund domicile for Asian private equity plans greater disclosure of information for Cayman-domiciled funds.

Funds and their directors in the Cayman Islands will soon come under greater scrutiny from the jurisdictions financial watchdog, the Cayman Islands Monetary Authority (CIMA).

Earlier this month the CIMA published a consultation paper which outlined plans for a public database of funds domiciled on the island for the first time, as well as a planned list of the funds’ directors. 

The consultation said these changes, alongside others, would produce “better managed entities; better board oversight of an entity; more focused risk management practices and enhanced controls to mitigate risks”.

Other changes in the consultation seek to clarify the role and duties of fund directors in accordance with existing common law principles and international supervisory standards.

CIMA also proposed the extension of Cayman’s Companies Management Law so that all directors, regardless of their location, fall under its purview. This means certain directors will be brought into the regulatory framework and must, for the first time, at minimum register with CIMA. 

This registration will also apply to the typical “investment manager director”, who often sits on the board of a fund which he also manages.

Directors who currently hold six or more appointments should also be pre-approved and licensed, according to CIMA’s statement. 

The proposals were welcomed by governance specialists the Carne Group. “They will help to bring the Cayman Islands funds regime more closely into step with accepted governance norms elsewhere in the world, enhancing this jurisdiction’s credibility and helping CIMA to provide a better investor protection framework,” said Carne Cayman Islands managing director, Peter Heaps, in a statement.

CIMA has asked for comments on its proposals and will accept submissions until 18 March.