Effective 14 October 2023, the new regulatory measurements implemented by the Cayman Islands Monetary Authority (CIMA) will apply to all regulated entities including:
Mutual Funds - Hedge Funds
Private Funds
Securities Investment Business Licensees and Registered Persons
Virtual Asset Service Providers (VASPs)
Company Managers
Corporate Service Providers
Money Services Businesses
Banks and Trusts
Insurance Companies
Building and Cooperative Societies
CIMA regulated corporate entities under the Directors Registration and Licensing Act (Revised).
The new Corporate Governance Rule and Internal Controls Rule create binding obligations on regulated entities, a breach of which may lead to the imposition of fines or other regulatory action.
New Regulatory Measures
The new Rules and Statements of Guidance are as follows:
Rule and Statement of Guidance on Internal Controls for Regulated Entities;
Rule on Corporate Governance for Regulated Entities;
Updated Regulatory Measures
The updated Rules and Statements of Guidance are as follows:
Statement of Guidance on Corporate Governance for Mutual Funds and Private Funds;
Statement of Guidance on Outsourcing Regulated Entities;
Rule and Statement of Guidance on Cybersecurity for Regulated Entities; and
Statement of Guidance on Nature, Accessibility and Retention of Records.
Internal Controls
The new Rule and Statement of Guidance on Internal Controls applies to all regulated entities. The Rule requires regulated entities to implement an internal control framework which consists of five parts: (i) control environment, (ii) risk identification and assessment, (iii) control activities and segregation of duties, (iv) information and communications, and (v) monitoring activities and correcting deficiencies. All regulated entities must ensure that the Rule is implemented appropriately based on its size, complexity, structure, nature of business and risk profile.
Corporate Governance
The new Rule on Corporate Governance also applies to all regulated entities. The Rule requires regulated entities to establish, implement and maintain a corporate governance framework that covers the entities:
objectives and strategies
structure and governance of the governing body
appropriate allocation of oversight and management responsibilities
independence and objectivity
collective duties of the governing body
duties of individual directors
appointments and delegation of functions and responsibilities
risk management and internal control systems
conflicts of interest and code of conduct
remuneration policy and practices
reliable and transparent financial reporting
transparency of communications
duties of senior management, and;
relations with CIMA.
All regulated entities must ensure that the Rule is implemented appropriately based on its size, complexity, structure, nature of business and risk profile.
Investment Funds
The Statement of Guidance on Corporate Governance for Mutual Funds and Private Funds replaces the 2013 version, and all funds should ensure that their corporate governance is up to date.
Next Steps
All regulated entities should ensure ongoing regulatory compliance including implementing the new corporate governance and internal controls frameworks and updating existing policies and procedures, subject to penalty.
How Bell Rock can Help?
As a leading Cayman professional services firm licensed and regulated by CIMA, we can assist with ensuring that our clients are compliant with CIMA's requirements. Please contact us for further information: info@bellrockgroup.com