By Colin MacKay, Ogier Fund Services – At its recent annual general meeting, the Cayman Islands Directors Association reported that new member applications in 2013 grew by over 15 per cent; further evidence, if it were needed, that the provision of corporate governance to alternative funds is one of the fastest growing sectors of the Cayman financial services industry. The debate on how best to prescribe and regulate the provision of effective corporate governance remains one of the most important to the industry, both at home and abroad. The challenge facing service providers and the Cayman Islands Monetary Authority (CIMA),

“Personally I think the Segregated Portfolio Company (SPC) structure has the potential to become a nightmare,” states Mike Saville (pictured), Director, Recovery & Reorganisation for Grant Thornton Specialist Services (Cayman) Ltd. “The structure is a way to spread administration and directorship costs but because an SPC is typically composed of multiple cells operating under one legal entity investors are setting themselves up for additional risks should problems arise.” Each cell within an SPC will have its own assets, liabilities and shareholders. Also, each cell is protected from claims by creditors of other cells against its designated assets.   Cost efficiencies

By Ras Sipko, Chief Operating Officer of Koger – Regardless of the differences in their intent and emphasis, both the Alternative Investment Fund Managers Directive (AIFMD) and the Foreign Account Tax Compliance Act (FATCA) impose considerable demands on fund managers with regard to data management and documentation. According to a recent and widely cited global survey of hedge fund managers by KPMG International, the Alternative Investment Management Association, and the Managed Funds Association, the hedge fund industry has already spent more than $3 billion to comply with new regulatory requirements, and considers FATCA and the AIFMD to be the most

The Statement of Guidance on corporate governance for mutual funds (SoG) published by CIMA in December 2013 is one of the key regulatory developments to have come out of the Cayman Islands in recent years. The results of an initial consultation with industry service providers were published by CIMA in July 2013. “The SoG is essentially CIMA providing high-level guidance on the minimum standards required of a fund director and is really an extension of the case law in the Cayman Islands summarised by Justice Jones QC in the Weavering case with respect to directors’ duties,” says Ian Gobin (pictured),

The one known unknown facing managers amidst increased regulation is the rising cost of doing business. But it’s not just managers facing cost pressures. Service providers are too, especially fund administrators who serve as gatekeepers to data managers and need to meet their myriad reporting needs.   “Each jurisdiction has their own agenda and has come up with their own form of reporting requirements. This creates a situation where everybody needs information from a number of different sources and that drives up the costs for managers and service providers,” says Canover Watson (pictured), Managing Director at Admiral Administration, now part

By Tim Buckley (pictured) and Ed Pearson, Walkers – After spending much of the year in consultation with the industry, CIMA’s near-term regulatory approach is becoming clearer. In early December, CIMA released its Statement of Guidance for regulated mutual funds, which sets out the Authority’s minimum expectations for sound and prudent governance. Accompanying the guidance was a summary of feedback the authority had received from industry participants in the course of its consultation.   Overall, the guidance reinforces the themes that have emerged following the financial crisis: transparency, information exchange and good corporate governance. In addition, it reflects the principles

By Geoff Ruddick, IMS Fund Services – Independence – Independence is the ‘Holy Grail’ of effective corporate governance. If a director is not independent, conflicts of interest will inevitably arise and interfere with the director’s ability to act in the best interests of the fund. Experience – You will get a good idea of a director’s experience from their ‘bio’, which will appear in the offering document of the fund. Confirm they have experience serving on boards with similar strategies. Although independent directors do not need to be experts a general understanding of the fundamentals of the underlying strategy is

For UBS Fund Services, the AIFM Directive represents a significant opportunity to expand its business offering. As a global operation, it is well positioned to capitalise on the regulatory changes being introduced in Europe as compared to administrators without a European presence. In addition to offices in Dublin and Luxembourg, both of which are already working to support managers under the directive, UBS also has its own dedicated AIFMD working group whose sole focus is keeping on top of salient issues. “We see a lot of opportunities to help our existing non-EU managers, some of whom are looking to establish

By Colin MacKay – The 2007/8 global financial crisis continues to influence the environment within which the Cayman investment funds industry operates. Global economic patterns, largely driven by factors emerging from that crisis, continue to shape cross-border political and regulatory developments. These, in turn, impact the investment management, banking, prime brokerage, administration, accounting and legal communities, each of which continues to favour Cayman for investment fund structuring and operation. In geo-political terms, 2013 has seen a continued evolution of the thinking on what British Prime Minister Cameron dubbed the “3 Ts” of cross-border activity: taxation, transparency and trade. This evolution

By James Williams – December 2013 proved to be a busy period for the Cayman Islands in terms of the development of its regulatory framework. On 6 December 2013, after a period of consultation with industry practitioners, the Cayman Islands Monetary Authority (CIMA) – the Islands’ financial regulator – released its Statement of Guidance for Regulated Mutual Funds (‘SoG-MF’).  In essence, the SoG-MF codifies and sets guidance on the minimum corporate governance standards required by operators of regulated mutual funds (directors, general partners) and gives the operators a clear understanding of their primary duties. For example, the operators must ensure