Recent updates for Cayman Islands regulated mutual funds

Statement of Guidance – Corporate Governance The Cayman Islands Monetary Authority (CIMA) has recently published a Statement of Guidance (Guidance) that applies to regulated mutual funds under the Mutual Funds Law of the Cayman Islands (Regulated Funds). All operators of Regulated Funds should review and be familiar with the Guidance. It is available here in the Regulatory Framework – Index of Regulatory Measures – Investment Services section of the CIMA website. The Guidance was published in the Cayman Islands official gazette on 13 January 2014 and came into effect on that day.

The Guidance is a non-exhaustive guide to CIMA's expectations for key corporate governance relating to the “Governing Body” of a Regulated Fund. The Governing Body of a Regulated Fund includes the board of directors, the trustee or the general partner.

The following are key principals set out in the Guidance:

• The Governing Bodies should monitor and supervise the performance of their Regulated Funds' service providers and consider having the service providers report to the Governing Bodies on a regular basis.
• The Governing Bodies should be able to effectively identify, monitor and manage all conflicts of interest and such conflicts of interest should be disclosed to investors.
• It is recommended that Governing Bodies should meet at least twice a year. The size, nature and complexity of the Regulated Funds may warrant more frequent meetings. An accurate and clear account of the meeting should be recorded.

The Guidance acknowledges that the appropriate level of governance for a Regulated Fund depends on factors such as assets under management, number of investors, the complexity of the structure, and the nature of investment strategy.

Public database for directors, trustees and general partners

CIMA has indicated it intends to set up a public database of directors, trustees and general partners of Regulated Funds. The objective of the database is to provide interested parties with factual information (not including any sensitive or proprietary information).

In addition, CIMA intends to implement a registration and licensing regime for directors of Regulated Funds. There have been previous discussions on whether to limit the number of directorships an individual can hold but CIMA has indicated that it does not intend to impose such a limit at this time.