Registered Persons and Non-Registrable Persons

The Securities Investment Business (Amendment) Law, 2019 (Amendment Law) replaces the concept of excluded person with that of “registered person”. Entities listed in Schedule 4 to the SIB Law (formerly excluded persons) are required to register with the Cayman Islands Monetary Authority (CIMA). An applicant for registration must satisfy CIMA that the applicant’s shareholders, directors and senior officers are fit and proper persons. As was the case for excluded persons, a registered person must file an annual declaration with CIMA and pay an annual fee. Annual declarations are due on 15 January each year, with the first declaration of Registered Persons (including former excluded persons) to be filed with CIMA by 15 January 2020.

A new category of non-registrable persons has also been introduced as Schedule 2A to the SIB Law. These persons were previously classified as excluded persons but would not have been required to file with CIMA an annual declaration or pay an annual fee.

Directors of Registered Persons

Prior to introduction of the Amendment Law, licensees under the SIB Law were required to have no fewer than two directors, or in the case of a company that does not have directors, two managers. No such minimum applied to excluded persons. The Amendment Law expands this requirement to apply to not only licensees but also to registered persons. This is a significant change, given that in order to serve as a director of an entity regulated under the SIB Law, such director must also comply with the Directors Registration and Licensing Law, 2014 (as amended), including the requirement to register with CIMA and to pay an annual fee.

New Filings and Deadlines

In addition to the requirement to re-register by 15 January 2020, under the Amendment Law registered persons must also provide CIMA with certain information by 15 August 2019. Failure to re-register or to supply the requested information will result in a registered person being deregistered by CIMA.

As of the date of writing, there are two forms to be filed with CIMA by the 15 August 2019 deadline. These are AIR-157-75AML Inherent Risk – Securities and ARC-158-75AML Risk Controls – Securities. To access these documents, please get in touch with your usual Appleby contact or any of the contacts below. Completed forms must be filed electronically via CIMA’s REEFS Portal. Registered persons should contact their registered office services provider to assist with these filings without delay.

CIMA’s Powers and Enforcement

Under the new Amendment Law, CIMA will have discretionary powers to:
(a) impose conditions on an applicant for registration at the time of registration;
(b) refuse registration for an applicant for registration; and
(c) employ its enforcement powers against a registered person.

CIMA will also have the power to give cease and desist directions to a licensee or registered person in relation to that person’s securities investment business. Failure to comply, without reasonable cause, will constitute an offence and subject a person, on summary conviction, to a fine of CI$50,000 or imprisonment for a term of one year, or both; or, on conviction on indictment, to a fine of CI$100,000 or imprisonment for a term of five years, or both, with a further fine of CI$10,000 for every day on which the offence is continued after conviction.

Final Thoughts

The Amendment Law as adopted did not retain certain provisions relating to substance for licensees and registered persons, as had been contemplated in an earlier bill. Persons engaged in the business of “managing securities” as defined under the SIB Law, however, need still be aware that they may well have obligations relating to economic substance under the regime as set forth under the International Tax Co-operation (Economic Substance) Law, 2018 (as amended). Persons engaged in this category of securities investment business are strongly encouraged to contact a member of the Investment Funds team below or their usual Appleby contact to discuss.

If you would like further information on any topic, please do not hesitate to ask your usual Appleby contact.

Share
X.com LinkedIn Email Save as PDF
More Publications
Appleby-Website-Arbitration-and-Dispute-Resolution
14 Nov 2024

Legal 500: A Comparative Guide to International Arbitration

A Legal 500 Guide to Arbitration provides a country specific Q&A overview of international arbitrati...

Appleby-Website-Dispute-Resolution-Practice
7 Nov 2024

Charting New Territory: How England’s Digital Assets Framework Can Guide Cayman Islands Law

The Law Commission of England and Wales’ Supplemental Report entitled “Digital Assets as Persona...

Appleby-Website-Fraud-and-Asset-Tracing
9 Oct 2024

Court of Appeal clarifies the merits threshold for the grant of freezing injunctions

What is a “good arguable case”? Alan Bercow looks at the Court of Appeal decision in Isabel dos ...

The Global Website header
7 Oct 2024

The Global – your offshore corporate law questions answered: October 2024

The Global is a quarterly collection of corporate expert insights and analysis across Appleby's glob...

Appleby-Website-Dispute-Resolution-Practice
3 Oct 2024

D’Aloia v Persons Unknown: Words of Warning for Cryptoexchanges and Implications for Victims of Crypto Fraud

In a recent judgment in D’Aloia v Persons Unknown, the High Court of England and Wales provided v...

Appleby-Website-Regulatory-Practice
2 Oct 2024

What Are the Duties of the Anti-Money Laundering Officers of a Cayman Fund?

All Cayman Islands funds are required to designate a natural person at managerial level as their Ant...

Appleby-Website-Regulatory-Practice
1 Oct 2024

Preparing for a Cayman Islands Monetary Authority Inspection

One of the most common ways in which CIMA assesses compliance with its regulatory framework is throu...

Appleby-Website-Fraud-and-Asset-Tracing
26 Sep 2024

Knowledge is key: Accessory Liability for a Strict Liability Offence Clarified

Why the UK Supreme Court’s clarification in Lifestyle Equities of accessory liability of directors...

Compliance
23 Sep 2024

Not a “banana republic” – Cayman Court delivers conclusive judgment on matters of forum conveniens and abuse of process

The Hon, Justice Parker delivered an informative judgment, providing helpful guidance in the areas o...