The Directors Registration and Licensing Act, 2014, as amended (Act) applies to any director acting on the board 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).
Directors of such entities must be registered with or licensed by the Cayman Islands Monetary Authority (CIMA). For professional directors and corporate directors, such persons will be subject to CIMA’s "fit and proper test" having regard to such director’s honesty, integrity and reputation, competence and capability and financial soundness.
Directors of covered entities are divided into three categories: (i) registered directors, (ii) professional directors and (iii) corporate directors. Different requirements apply to each category.
Registered Directors
A natural person appointed as a director of fewer than 20 covered entities is required to be a registered director. Registered directors are not, as such, regulated by CIMA.
The registration fees (including the application fee) payable to CIMA for a registered director are US$853.66.
Professional Directors
Professional directors are defined as natural persons appointed as directors for 20 or more covered entities. There are important exceptions in the case of representatives of some investment managers and other licensees, as discussed below.
Professional directors must apply for a license and, if successful, are regulated by CIMA under the Act. CIMA may grant a professional director license with such conditions as it considers appropriate. The licensing fees (including the application fee) payable to CIMA for a professional director are US$3,658.54.
Corporate Directors
A body corporate appointed as a director for one or more covered entities must apply for a license and, if successful, will be regulated as a corporate director under the Act. CIMA may grant a corporate director license with such conditions as it considers appropriate. The corporate director licensing regime also requires that the corporate director:
be a company incorporated under, or registered as a foreign company under, the Companies Act (Revised); and
appoint to its board at least two natural persons who are registered or licensed under the Act.
Application
Application for registration in the case of registered directors or for a licence in the case of professional or corporate directors must be made in the prescribed form to CIMA and submitted with the prescribed fee.
No person may be appointed as a new director of a covered entity until such person has submitted an application to be registered/licensed under the Act.
In the case of a mutual fund seeking to be registered with CIMA, no director may be appointed to the board of that mutual fund who is not already registered or licensed with CIMA under the Act.
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.
Notification of Changes
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 there are significant penalties for failing to comply with this requirement.
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 Director Services
As a leading provider of fund governance, regulated in the Cayman Islands, and with professionals with over 20 years senior level industry experience acting on the board of investment funds across all types of funds such as hedge funds, crypto funds, venture capital and private equity funds (plus investment advisory committee's and governance committee's), we also act on the board of investment management entities. For further information on appointing members of our team to your covered entity, please contact us: info@bellrockgroup.com