Cayman Islands Financial Services

The Grand Court of the Cayman Islands has reached a ground-breaking decision that assumes the power to grant asset-freezing injunctions over Cayman assets in support of certain foreign legal proceedings.

The Cayman Islands’ court has made the decision to grant a free standing Mareva injunction, so-called in reference to a 1975 UK case, “Mareva Compania Naviera S.A. v International Bulk Carriers S.A.”.

According to Ogier, the offshore legal firm, such an injunction permits a court to prevent a defendant from transferring assets until the outcome of the law suit is decided, with a view to ensure the assets of the defendant are not dissipated to avoid a satisfactory judgement. Ogier noted that the Court has held that it has power to grant asset-freezing injunctions over Cayman assets in support of foreign proceedings, where the only relief claimed in the Cayman Islands Court is the asset-freezing injunction itself. It also has been said that there is no other cause of action against the defendant within the jurisdiction of the Cayman Islands courts, other than the freezing order relief sought.

When commenting on the court’s decision, Ogier Cayman Partner and Head of Litigation Chris Russell, stated that this case follows a modernising trend and it is expected to be widely welcomed, therefore, this is a significant contribution to cross-border co-operation and protection”.

Walkers, leading international financial centre law firm has recently announced a series of senior management changes within the global group.

With the forthcoming retirement of Global Chairman Wayne Panton, an attorney with Walkers since 1988 and a partner with the firm since 1997, this key strategic role will be taken on by current Global Managing Partner Grant Stein. The appointment will be effective from July 1, 2011.

Also from July 1, 2011, Diarmad Murray, the current Managing Partner of Walkers’ Cayman Islands office, will become Walkers’ Global Managing Partner. He joined the company in 1994 and became its partner in 2000. As Global Head of Walkers’ Commercial Litigation and Dispute Resolution Group and having been Managing Partner of Walkers’ Cayman Islands office since 2009, Murray’s appointment as Global Managing Partner ensures a successful transition for Walkers in this position.

Stein commented: “We are delighted to have Diarmad taking over the reins as Global Managing Partner, following the unanimous support of the partnership. He has done an excellent job in reshaping the Cayman Islands office over the past two years and our senior management team is extremely strong as we embark on the next phase of the firm’s growth.”

It should be noted that, along with its Cayman Islands office, the Walkers Group has offices in Hong Kong, Jersey, the BVI, Singapore, Delaware, Dubai, Dublin, and London.

On May 2, Greenlight Capital Re Ltd. announced that it will promote Bart Hedges, the current President and Chief Underwriting Officer of Greenlight Re, to Chief Executive Officer effective August 15, 2011. Greenlight Re is a multi-line property and casualty reinsurance company with headquarters in the Cayman Islands.

Hedges will succeed Greenlight Re current CEO Len Goldberg, who is planning to retire, and will also serve on the Board of Greenlight Re.

Greenlight Re is an AM Best ‘A-’ (Excellent) rated specialist property and casualty reinsurance company based in the Cayman Islands that provides a variety of custom-tailored reinsurance solutions to the insurance, risk retention group, captive and financial marketplaces.

As a result of a consultation process, the Cayman Islands is to amend its Companies Law in order to enhance the competitiveness of its financial services industry.

When tabling the Companies Law (Amendment) Bill, 2011, McKeeva Bush, Cayman Premier and Finance Minister, highlighted that the expected benefits the jurisdiction’s local industry is to reap and noted that new opportunities for growth are predicted.

The Bill’s drafting was participated in by the Ministry of Finance, the Registrar of Companies, and the Cayman Islands Monetary Authority (CIMA).

Provisions of the Companies Law include the following:
- amendments to the Cayman Island’s merger provisions;
- updates to foreign company provisions;
- special resolutions permitting different thresholds for different matters;
- changes to treasury shares, share redemption and repurchase, and paperless share transfer;
- permitting company names in a foreign script;
- segregated Portfolio Companies (portfolio names, director’s liability, segregation of assets and termination of SPCs).

Bush said that the process by which these amendments were prepared reveals the government’s renewed partnership with the private sector, ”which has been instrumental in soliciting the views of industry and providing input into the drafting process”. He noted: “These amendments are the end result of an extensive consultation process, aimed at addressing client and market-driven issues that have arisen in practice. It is expected to increase the attractiveness of the Cayman Islands as a domicile for corporate entities and maintain our competitive edge”.

The Cayman Islands’ temporary 1-year pension contribution suspension is to end, which is to affect private sector both employers and employees, as well as self-employed individuals.

In April, 2010, this measure was introduced with an amendment to the National Pensions Law. The measure was to provide a temporary 1-year suspension of pension contributions and a temporary 2-year suspension period for non-nationals. According to the government of the Cayman Islands, it was implemented in response to the global economic recession. It was aimed at easing people’s financial burdens and stimulating the economy.

Recently, the Cayman government has issued a reminder that, as of April 26, Caymanians from their first day of employment are pensionable immediately, required to participate in a pension plan and pay pension contributions.

Rolston Anglin, the minister responsible for pensions, commented: “These contributions are extremely important to continue each employee’s long-term savings for retirement. It’s a critical part of their retirement planning”.

Cayman Finance, a private-sector membership-based organisation that promotes Cayman’s financial services industry through public relations, public affairs and marketing initiatives has announced that Richard Coles has been voted in as its incoming chairman.

Coles is former Attorney General for the Cayman Islands with an impressive resume. He is currently an independent director for hedge funds, structured finance vehicles and investment and financial sector companies and had built a successful law firm in England before he moved to the Cayman Islands. So, he should be a good leader for Cayman Finance, which is the voice of Cayman’s financial services industry.

At an annual general meeting of Cayman Finance held on April 13, 2011, Coles was talking about his commitment and his capabilities to further develop Cayman Finance’s relationship with the Cayman Government.

Also, a new board was elected. The directors of Cayman Finance are Peter Cockhill (Ogier), Nick Freeland (PWC), Gonzalo Jalles (HSBC), Mark Lewis (Walkers), Roy McTaggart (KPMG), Conor O’Dea (Butterfield), David Roberts (Cayman Management), Daniel Scott (Ernst & Young), Henry Smith (Maples and Calder), Ian Wight (Deloitte).

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On March 21, A Tax Information Exchange Agreement (TIEA) that is designed to strengthen the commercial relationship between the Cayman Islands and India was signed by the 2 countries.

This is the 22nd agreement signed by the Cayman Islands. Premier McKeeva Bush said that the government of the Cayman Islands has a strong working relationship with Indian government, so the jurisdiction looks forward to implementing the terms of this TIEA.

On behalf of India, the document was signed by High Commissioner to the Bahamas, the Cayman Islands and Jamaica Mohinder S. Grover. He commented that both the Cayman Islands and India are members of the OECD Global Forum Global Forum on Transparency and Exchange of Information for Tax Purposes, therefore it is important to ensure the effective implementation of the international standards of transparency and exchange of information for tax purposes.

George McCarthy of the Cayman Islands International Tax Cooperation Team said that the TIEA “will provide a common ground upon which the Cayman Islands and India can exercise mutual cooperation and focus on increasing investment funds business in the Cayman Islands”.

A number of Caribbean jurisdictions have been assailed by the United States for their alleged continued facilitation of money laundering and financial crimes.

In the 2nd part of the 2011 International Narcotics Control Strategy Report (INCSR), the State Department was particularly concerned about efforts made by several offshore jurisdictions in addressing these crimes. One of the jurisdictions under concerns was the Cayman Islands.

The report said that most money laundering in the Cayman Islands is primarily related to fraud and drug trafficking. The State Department suggests that, due to its status as a zero-tax regime, the Cayman Islands is considered attractive to those who intend to evade taxes in their home jurisdiction.

The report said: “While the country has increased both its regulatory and law enforcement staffing, the number of prosecutions and convictions is extremely low, given the vast scale of the country’s financial sector”. It also stated that only 6 successful prosecutions for money laundering and only 1 in the last 4 years have taken place.

According to the INCSR, the lack of penalties for failing to report information on ownership and identity undermines the effectiveness of the obligations. “This is a problem in particular for an estimated 3,000 unregulated mutual funds resident in the Cayman Islands”. The report added that there are no requirements for companies, trusts and partnerships to retain records for at least 5 years.

The 2nd part of the 2011 International Narcotics Control Strategy Report urged the Cayman Islands to continue computerising various registrations, particularly those for mutual funds, as it is necessary to pay more attention to the risks and proper supervision of non-profit organisations.

The report also expressed such concerns about not enough control of money laundering and financial crime in Belize, the BVI, the Bahamas, and Antigua and Barbuda.

A new Memorandum of Understanding (MOU) has been signed by the Cayman Islands with the jurisdiction’s neighbour Turks and Caicos Islands.

The agreement was signed on February 25 to formalize cooperation between the 2 Caribbean authorities, which had been informally occurring otherwise. The document provides for the exchange of information and investigative assistance between the Cayman Islands Monetary Authority (CIMA) and the Turks and Caicos Financial Services Commission (TCI FSC).

The MOU outlines the types of assistance that can be requested and given by CIMA and the TCI FSC including providing, confirming or verifying information; obtaining specified information and documents from other parties; discussing issues of mutual interest; arranging and/or conducting inspections of financial services providers; and permitting representatives of the requesting authority to participate in enquiries by or on behalf of the requested authority.

On behalf of the Turks and Caicos Islands, the MOU was signed by TCI FSC Managing Director, Mr. Kevin Higgins, who welcomed the development: “The FSC looks forward to working more closely with one of the premier regulatory agencies in the Caribbean.”

CIMA’s Managing Director Cindy Scotland said: “We are pleased to formalize methodologies of cooperation that has existed between CIMA and the Turks and Caicos Islands. We see this MOU as reinforcing our strong international cooperation regime and further demonstrating our commitment in this area.”

This Memorandum of Understanding is the 19th signed by the Cayman Islands Monetary Authority (CIMA).

The Chief Executive Officer of Barclays Robert Diamond has told UK parliamentarians that the bank does not evade taxes. He suggested examining the bank’s offshore operations.

Diamond told a Treasury Committee hearing at the House of Commons in London that Barclays does not evade taxes and is complying with legislation. He answere questions from parliamentarians who alleged that the bank had more than 300 companies operating in the Cayman Islands, the Channel Islands and other tax havens.