Cayman Islands Financial Services

The Economics and Statistics Office (ESO) is forecasting decreased inflation for 2006 at below 1%, which is an essential decline from 3% expected initially.

In accordance with the latest ESO forecast for 2006, which came after compiling the CPI for the quarter ended in September 2006, the year-on-year inflation rates for the first 3 quarters of 2006 bring the average inflation rate in 2006 so far to 0.1%. Taking into account this average inflation, the predicted inflation for this past year overall is 0.87%.

Housing in Cayman led the way in downward price movement as far as the index revealed a reduction in average rental prices by 3.3%. According to ESO, in South Sound the index fell 18.2% and in Prospect by 8.1%.

As to the average price index for utilities, it rose by 2.4% in September 2006, compared to September 2005.

On January 24, 2007, a Cayman-registered company Skysoft announced expanding its paid-in capital by USD 13 million.

Skysoft is the operator of the KKBOX website to offer online music streaming and download services in Taiwan. The company also announced that KKBOX has become the largest online music platform in Taiwan as it has more than 200 000 members.

Skysoft’s additional capital was invested by a Taiwan-based investment bank named the China Development Industrial Bank, and by three Japan-based companies – ORIX, Dwango and TransCosmos.

KKBOX has licensing from 111 publishers of music discs. By the end of this year, the website aims at increasing the number of its members up 350 000 – 400 000. Also, KKBOX intends to set up R&D subsidiaries as well as to cooperate with local producers of home-use digital devices to tap markets in China, Hong Kong, Japan and Singapore.

Greenlight Capital Re Ltd., Specialty property and casualty reinsurer based in the Cayman Islands is to sell up to USD 175 million in stock in an initial public offering (IPO).

In accordance with the Securities and Exchange Commission, Greenlight Capital Re Ltd. intends to list its Class A shares on the Nasdaq Global Select Market. The company plans to use the net proceeds from this offering for additional capital needed for underwriting operations as well as for general corporate purposes.

The number of shares to be offered in the IPO has not been disclosed by Greenlight as well as an estimated price range has not been provided.

After the IPO, the company will sell an undisclosed number of Class B shares at the IPO price to David Einhorn, its chairman.

For the 9 months ended September 30, 2006, the net income of this Cayman-based company grew to USD 39.6 from USD 29.7 million for the same period a year ago, while its revenue rose to USD 54.3 million from USD 22.3 million.

The offshore law firm, Maples and Calder, has announced that Drafting Cayman Islands Trusts had been published. The Draft is co-authored by a Cayman Islands attorney-at-law based in the firm’s London office and James Kessler QC, a leading English Chancery barrister and UK tax adviser, Tony Pursall.

Drafting Cayman Islands Trusts is the 1st book of its kind, which takes a modern well-explained approach to legal drafting of Cayman Islands law.

The Cayman Islands is one of the main jurisdictions for establishing offshore trusts, and, accordingly, the drafting of effective Cayman trust instruments is a complex task. The draft provides a detailed explanation of the terms and related drafting issues. It should become a valuable resource for practitioners and administrators alike.

The launch of the book in the UK will be hold on January 18, 2007.

To conclude, it is worth mentioning that Maples and Calder has one of the largest global offshore trust practices in the world with 7 leading specialist trust lawyers.

In the very beginning of year 2007, the Cayman government announced that Amendments revising the Cayman Islands Immigration Law (2006 Revision) had come into force. Following the passage of the Immigration (Amendment) (No. 2) Bill, 2006, the bill received the Governor’s assent last month, and after that it was published on December 21, 2006.

The law consists of 59 pages and contains many changes to the existing Immigration Law, 2003. There are changes in permanent residency, work-permit term limits, a new category of key employees as well as in the ability of the Chief Immigration Officer to grant Caymanian Status to some particular categories of applicants.

It is worth mentioning that many amendments to the draft bill resulted from public input to the discussion draft.

A number of important amendments are expected to benefit both employers and employees as they are closely connected with the fixed term work permit provisions as well as with the fact that many people are rapidly reaching the end of their term limit.

The amendments to the law are aimed at providing certainty for employers and employees.

The offshore law firm Maples and Calder has acted as Cayman Islands counsel to the issuer, ADIB Sukuk Company Ltd. in establishing its USD 5 billion sukuk issuance programme, which is the 1st Islamic-compliant bond to be listed on the London Stock Exchange.

ADIB Sukuk Company Ltd., registered in the Cayman Islands, was set up by Abu Dhabi Islamic Bank (ADIB) as a special purpose entity. It has issued sukuk for investors to use the proceeds for acquiring a co-ownership interest in a portfolio of assets comprising lease contracts from ADIB, the 2 parties becoming co-owners of the assets.

Maples and Calder Dubai managing partner, Tahir Jawed commented that this transaction was a very important development for the whole Islamic finance market. He also emphasized the fact that the Islamic finance market “has seen phenomenal growth” in the last few years.

“The transaction volume and its being listed on the London Stock Exchange signifies that the enormous potential of Sharia compliant products has been recognised by the global financial community. So, now these products got accepted as a mainstream asset-class by investors.

It is also worth noting that the transaction shows that the Cayman Islands is becoming the leading offshore jurisdiction for Islamic finance.

RG Capital Management of the Cayman Islands has taken a 7.3% stake in Mechanical Technology Inc.

Mechanical Technology, deals with producing precision instruments and micro fuel cells. On December 15, 2006, the Albany company announced it was selling about 6 million shares of its common stock to 3 investors. Approximately USD 10.3 million proceeds are planned to be spent primarily to support further development and commercialization of Mobion fuel-cell technology.

At the announcement, Mechanical Technology did not disclose the names of the 3 investors, however later. on December 22, 2006, RG Capital Management LP filed a statement with the US Securities and Exchange Commission to reveal having purchased 2.77 million shares of the Mechanical Technology. It also acquired warrants in order to purchase another 1.38 million shares of Mechanical Technology.

The Florida Caribbean Cruise Association has chosen the Cayman Islands to host another large tourism conference in May 2007.

It is expected that the Caribbean Tourism Organization’s annual Sustainable Tourism Development Conference could attract some 300 to 400 delegates to Grand Cayman, which is about a 3rd of the size of the FCCA event held here in late October and early November.

Minister of Tourism, Charles Clifford, suggests that this conference is very significant. After attending the 2006 Sustainable Tourism Conference in Puerto Rico, he found issues addressed there often concerned far-reaching topics. The minister also noted that a large number of delegates had attended the previous year’s conference via cyberspace, and therefore he expects the same option to be available in Cayman.

The conference will take place in Cayman in May, and local tourism officials are going to use it to advertise the island’s Go-East initiative, aimed at enhancing the number of visits to East End and Bodden Town.