1. Filings – UPdated

AEOI Filings

The DITC issued an Industry Advisory on 15 April 2020. The advisory noted an FAQ (FAQ 5 under the heading Reporting) that had been published by the US Internal Revenue Service the day before. That FAQ provided for an extension of time for Model 1 IGA jurisdictions to provide their 2019 FATCA data to the United States competent authority. As a result of this change by the US, the DITC extended the FATCA reporting deadline for the 2019 reporting period to 16 November 2020.

On 29 April 2020 the DITC also extended the reporting deadline for CRS filings, also to 16 November 2020.

BENEFICIAL OWNERSHIP FILINGS

On 20 April 2020 The Ministry of Financial Services & Home Affairs issued an Industry Advisory notifying that future submissions are required to capture the new legal definition for “beneficial owner”. Effective 15 May 2020, a beneficial owner under the Companies Law and the Limited Liability Companies Law is one who holds ‘25% or more’ (rather than ‘more than 25%’) of the shares or voting rights in a company.

On 30 April 2020 the Ministry of Financial Services and Home Affairs (MFS) issued a notice advising that MFS and its related entities have instituted a number of changes to increase efficiency of its operations to better support the work of the financial services industry in the midst of the coronavirus (COVID-19) pandemic. Most of the changes can be seen in the registration of company details with the Registrar of Companies and the filing of intellectual property through the Cayman Islands Intellectual Property Office. Both sections of the General Registry department have increased the amount of staff able to work remotely.

ANNUAL FEE PENALTY

Companies and exempted liability partnerships that failed to file their annual returns and/or pay their annual fees by the 30 June 2020 deadline are subject to penalties as of 1 July 2020. The penalty fee in effect will be 33.33% of the annual fees due. All companies would be subject to the penalty, including limited liability companies and foundation companies.

The Cayman Islands Monetary Authority

The Cayman Islands Monetary Authority (CIMA) published a notice on 25 March 2020 confirming a one-month extension of the filing deadlines for certain regulatory returns with due dates through 30 June 2020. A complete list of the filing extensions can be found here.

There are no fees associated with the recently published extensions for filing regulatory returns. However, all fees remain in effect and are payable upon the relevant regulatory filing being made. CIMA expects that all submissions will be filed on or before the extended deadline, unless otherwise notified.

In lieu of a notarised affidavit, CIMA will accept written confirmation from an operator of a fund, applying to be registered/licensed pursuant to the Mutual Funds Law or Private Funds Law, authorising the registered office or other service provider to file the fund’s registration/application on behalf of the operator. CIMA will accept uncertified resolutions that confirms the de-registration/cancellation date of a fund.

On 1 April 2020, CIMA issued a notice (the contents of which are set out below) inviting banking licensees, particularly those providing essential retail services to the local community, to contact CIMA should there be any specific regulatory issues or circumstances that they can assist with, including assistance with regulatory ratios, filing requirements or other regulatory matters, all of which will be considered on a case by case basis.

CIMA appreciates that licensees and registrants may experience challenges as a result of disruptions to normal business operations during these unprecedented times. Therefore, CIMA wishes to invite banking licensees, particularly those providing essential retail services to the local community, to contact them should there be any specific regulatory issues or circumstances that they can assist with. This may include assistance with regulatory ratios, filing requirements or other regulatory matters, all of which will be considered on a case by case basis. Requests or enquiries should be sent via email to Head of Banking Supervision Division, Mrs. Gloria Glidden at GloriaGlidden@cima.ky , copying Managing Director, Mrs. Cindy Scotland at CindyScotland@cima.ky  and Deputy Managing Director – Supervision, Mrs. Anna McLean at AnnaMcLean@cima.ky .

In the face of this pandemic, CIMA will continue to remotely engage and consult with industry representatives to provide aid and regulatory forbearance to licensees wherever possible.

Other measures undertaken by CIMA to assist the financial services industry thus far include extensions for filing regulatory returns, waived fees for such filing extensions and acceptance of alternatives for notarised documents.

On 6 April 2020, CIMA published a notice reminding licensees and other interested parties that they are working remotely and to use the key email addresses set out within the notice.

On 21 April 2020, CIMA also issued an advisory to assist regulated entities with AML/CFT compliance during COVID-19. It includes helpful guidance on matters such as possible threats and vulnerabilities and how entities may verify information (both at the time of establishing relationship or as a part of ongoing customer due diligence) whilst observing curfew, social distancing or self-isolation.

In keeping with the overall uptick in cybercrime during COVID-19, on 2 June 2020 CIMA warned of fraudulent emails in circulation purporting to be from CIMA. The emails contain the subject “CIMA – Due Diligence & Questionnaire Request”. Recipients are advised not to click on any links or attachments within such emails. Further details are set forth in the notice attached here.

You can find more information on CIMA’s latest developments here.

Ministry of Financial Services & Home Affairs

On 16 April 2020, The Ministry of Financial Services & Home Affairs issued a Q&A relating to their operations during COVID-19.  

Court filings

The Chief Justice has issued a practice direction that formalises the e-filing that had been introduced as a response to the difficulty of paper filings. The direction provides for the court file to exist in electronic form and for documents to be sealed using an electronic, digitally certified seal. The electronic file and seal have the same status as their hard copy counterparts. The practical importance of this is that it allows originating process, such as writs and petitions to be validly issued in electronic form at a time when paper filing is not possible. It prevents the legal process being stymied by an inability to complete the formality of issuing using paper filing.

It is expected that the system will become the new norm and that paper filing will become redundant before long.

The Chief Justice has also issued a practice direction giving guidance on the remote notarization and attestation of documents and the administering of oaths by electronic means. This is to be read in conjunction with enabling regulations made on 17th April 2020. The practice direction identifies the formalities that must be satisfied regarding presence in the Islands, the transmission of documents, the recording of the notarial act and identification. The practice direction also applies to attestations by Justices of the Peace. While the immediate spur to pass these measures is the need for social distancing, it is clear that the measures will remain in place after the threat of COVID-19 has passed, promoting the efficient transaction of business long into the future.

There is a shelter at home regime in place, which means that it is not possible to deliver hard copy documents to the court office for the time being. In view of this, electronic filings must be accompanied by an undertaking to lodge a hard copy when circumstances permit.

land registry

On 17 April 2020, The Registrar of Lands issued a notice advising of the availability of an updated Statutory Declaration to be completed by attorneys at law in private practice, an employee undertaking lodgments on behalf of a Class A Bank, and the Credit Union. The amendment will allow submission of documents currently being held by another private practice attorney, Class A Bank or the Credit Union which will allow a number of essential transactions to proceed.

The Registrar noted: “For the protection of all the parties, including the Office of the Registrar there must be delivery of the executed instruments. The proposal would allow constructive delivery between attorneys and the financial institutions, so that the attorney submitting the instruments can demonstrate or confirm that the transaction was validly executed and is being treated as delivered on the basis that it will be physically delivered to the submitting party immediately after the Land Registry re-opens.”

As of 19 May 2020 Lands & Survey has implemented a DropBox Facility for document registration at the Cayman Islands Government Administration Building. Customers and lodging parties must leave their documents with Security. This includes all registrations/dealings, re-lodgments and evidence documents. The ‘drop and go’ lodgment process is as follows:

  • Before visiting, customers complete the relevant documents including the document submission log and ensure their email address and contact details are provided.
  • Customers deliver documents to Security at the Government Administration Building for ‘drop and go’ service.
  • Once reviewed by Lands & Survey, customers receive a distinctive reference number for their lodgment by email.

Customers will be advised of applicable registration fees by email, which must be paid using the banking information provided by Lands & Survey on its website at www.caymanlandinfo.ky

The Passport and Corporate Service Office

The Passport and Corporate Service Office issued an advisory that they are currently unable to accept documents for legalization/apostille due to COVID-19. They will be moving to a provisional system whereby clients will be required to contact the Passport and Corporate Service Office to confirm the authenticity of signatures.

A Notary will still be required to sign and seal documents, and affix the commission date stamp as usual, ensuring that the Notary’s name is legible. No express service will be offered with this provisional system.

Notary Public

Regulations were gazetted on 17 April 2020 to allow a notary public to use, on prescribed conditions, “communication technology” to carry out virtually a notarial act, such as witnessing the execution of a document by a “remotely located individual” (who must demonstrate that he or she is physically situated in the Cayman Islands).

The term “communication technology” is defined to mean “any electronic device or process that facilitates communication of visual images and audio in real time between a notary public and a remotely located individual, including a remotely located individual who has visual, hearing or speech impairment”.

A “remotely located individual” means “an individual who is not in the physical presence of the notary public who is required to perform a notarial act under the Law”.

Under regulation 3, of the regulations, notwithstanding any requirement under any other law, a notary public may, subject to the conditions set out in regulation 4, use communication technology to carry out virtually:

  1. any of the notatial acts listed in Schedule 5 to the Notaries Public Law; or
  2. any act that is required to be performed by a notary public under any law including the provisions of any treaty or convention and any protocol to such treaty or convention that is applicable to the Cayman Islands.

A notary public who uses communication technology to

  1. administer an oath shall record, or cause to be recorded, the performance of the notarial act; and
  2. perform an act under regulation 3 other than the act of administering an oath, may, upon prior notification of the remotely located individual, record, or cause to be recorded, the performance of the act.

A notary public may repeat the notarisation of a relevant document in relation to which notarial acts were performed where the notary public receives the relevant document together with a copy of the notarised document within 30 days after the date of execution.

A notary public who becomes aware that a notarial act was not performed in compliance with the regulations must, within three days of becoming aware of the non-compliance, notify the Clerk of the Grand Court in writing of that fact and provide the Clerk with details of non-compliance.  The appointment of a notary public who fails to so inform the Clerk may be suspended immediately.

Contravention of the regulations constitutes an offence that, on summary conviction, may attract a fine of $1,000 or imprisonment for a term of six months or both.

The regulations shall cease to have effect on 16 April 2022 or at such other date as Cabinet may appoint by Order.

ApplebY advises on neW recovery fund foundation

Appleby has recently advised on the structuring of a new Cayman Islands foundation company established to manage a private sector-led recovery fund to assist the Cayman Islands in the wake of the global COVID-19 pandemic. The fund received an initial injection of $1 million, a personal donation from Cayman businessman, Mr. Kenneth Dart. The fund will be managed by the newly established foundation known as R3 Cayman Foundation. The goal of the fund, as listed by the foundation, is to “support readiness, relief and recovery efforts in the Cayman Islands in response to emergencies and disasters, such as but not limited to the COVID-19 pandemic”. Following its recent establishment, it is intended that R3 Cayman Foundation will be registered as a non-profit organisation.

2. Can searches be conducted?

The Cayman Online Registry Information Service (or CORIS) is the main means of obtaining publicly available information about Exempted Limited Companies, LLCs and Exempted Limited Partnerships. It is an electronic register and its functionality has not been affected by measures put in place to deal with COVID-19.

Court searches involve the inspection of the register of writs and originating process and the register of judgments. The Cayman Islands Judicial Administration recently launched an online platform for performing these searches and these searches are not affected by COVID-19.

3. Certificates of good standing – if and how these are being conducted

Certificates of good standing are issued by the Registrar of Companies. We have recently seen instances of delay by the Registrar providing COGSs. In these cases, the parties to transactions affected have been willing to proceed on the basis of a certificate provided by a party’s registered office provider confirming that, pursuant to a search of CORIS conducted on the relevant date, the party is in good standing with the Registrar of Companies in the Cayman Islands.

4. Other searches – how are these being conducted?

Land Registry searches can be conducted electronically by those with subscriptions to the online search service. Personal searches at the Registry are also an option, although this is not in practice the way the legal profession conducts searches. These searches may now be conducted by email in order to avoid unnecessary face to face contact.

5. Court sessions and position (including filings and hearings).

The Chief Justice has made two practice directions to facilitate remote hearings. These remove restrictions on holding trials by video, remove the requirement for parties to attend the courtroom in person and enable greater use of paper only hearings. The practice direction also explains what has to be done to satisfy the need for hearings to take place in public when they are taking place entirely online. There must be a recording made of the hearing and the recording must be placed on the Judicial Administration website. The Court of Appeal’s most recent session has been successfully held with the Justices of Appeal presiding from their homes in the UK. The Financial Services Division and other civil courts have carried on their business using technology to hold remote hearings at which there is no appearance in person. Cayman has successfully contained the initial onslaught of the coronavirus and has (per head of population) one of the most extensive test and tracing programmes in the world; businesses are re-opening incrementally and with suitable precautions. This week sees the resumption of in person hearings at criminal courts with appropriate social distancing. If that is successful it may be the precursor to a progressive resumption of in person hearings in civil cases.

6. Any travel restrictions 

The coronavirus has been very successfully controlled in Cayman. The islands rank third in the world for testing per capita and serious illness from the virus has been rare in recent weeks. As a result, restrictions for suppressing COVID-19 are now minimal: offices have been permitted to re-open, private gatherings from different households are permitted indoors, restaurants and bars are permitted to serve in outdoor areas. Social distancing is still required and face masks are mandatory where social distancing is difficult. The borders remain closed to protect these hard-earned gains.

7. Implications for economic substance compliance and residency – updated

With respect to economic substance (ES) requirements, the DITC has acknowledged that COVID-19 may impact travel in 2020, which may in turn affect the ability of some entities to hold their board of directors meetings in Cayman during the year. The DITC has noted that the “directed and managed” requirement is only one element of the ES test, and whilst travel restrictions may be taken into consideration on a case-by-case basis when determining whether an entity has passed or failed the ES test, the DITC has been clear in pointing out that this consideration would impact on 2020 reports, which are due in 2021.

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