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The Cayman Islands is a popular jurisdiction for setting up global funds and financial firms, with investment managers all over the world taking advantage of the jurisdiction’s robust financial infrastructure and tax neutral status.

In many cases, financial businesses run in, or through, the Caymans require regulation and licensing under the Securities and Investment Business Law (‘SIBL’). However, the SIBL provides certain limited exemptions from the need for a licence. These exclusions are set out under Schedule 4 of the SIBL, and some qualifying entities must register with the Cayman Islands Monetary Authority as “excluded persons”.

Exclusions under SIBL Schedule 4

Schedule 4 provides for six categories of excluded persons, with only three of these requiring registration with CIMA. The excluded categories are summarised below:

  1. A company providing intra-group securities investment services exclusively for other members of their corporate group (registration required);
  2. Carrying on the investment business in relation to a joint enterprise in which the excluded person or a group company participates (registration not required);
  3. Various Cayman Islands government bodies;
  4. Companies whose clients are exclusively:
    • “Sophisticated persons”, being public companies, entities regulated in the Caymans or a recognised foreign regulator, or knowledgeable and experienced investors whose transactions are at least US$97,600;
    • “High net worth persons”, being individuals with either i) a net worth of at least US$975,610 or ii) gross assets of at least US$4.88 million; or
    • An entity or trust composed solely of high net worth and/or sophisticated persons;

    This option is the most flexible and oft-used excluded person structure used in the Cayman Islands (registration required).

  5. Securities businesses that would qualify under section 4 above and are licensed by a recognised foreign regulator (registration required); and
  6. Fiduciaries such as directors, partners, liquidators or trustees dealing in securities incidental to their primary capacity (e.g. an executor of a will selling an estate’s securities to pay beneficiaries) (registration not required).

Applying for excluded person status

Cayman Islands exempt companies are often used as vehicles for excluded person status under Schedule 4. Partnerships, ordinary non-resident companies and local companies are also eligible for the status.

Where registration is required, applicants seeking excluded person status must take the following steps:

  1. Register all directors with CIMA under the Directors Registration and Licensing Law (only for registration under sections 1 and 4 of Schedule 4). Depending on the directors use, government fees range from US$854 to US$9,756. The more directorships held by the applicant, the higher the fee;
  2. Appoint a money laundering reporting officer (MLRO) in accordance with the Cayman Islands Money Laundering Regulations;
  3. Appoint a compliance officer;
  4. Establish an internal audit function to ensure that the entity’s controls and procedures are adequate to meet compliance rules and aims; and
  5. File a declaration and US$4,270 licence fee with CIMA, confirming the entity’s suitability for excluded person status.

Getting advice

Healy Consultants Group PLC has experience with establishing companies as excluded persons in the Cayman Islands, and can assist your firm with registration and compliance. Our firm can assist with incorporating your Cayman Islands company, drafting documentation for excluded person registration, registering the company’s directors with CIMA, and providing an MLRO and compliance officer.

To learn more, visit Healy Consultants Group PLC’ website or write to our experts at .

Photo by Sam valadi, available under a Creative Commons Attribution 2.0 Generic (CC BY 2.0) license.