Guernsey: Cayman Islands Quarterly Update - May 2017

Beneficial ownership registers

In April 2017, the Cayman Islands Government met its commitment to the UK Government made a year earlier by enacting a regime requiring Cayman Islands companies to maintain registers of their beneficial owners. The regime has not yet come into force, but is expected to do so by the end of June 2017. The regime has certain regulated and listed company exemptions and generally only applies to ultimate beneficial owners holding more than a 25% interest, together with certain entities through which their interest is held.

Companies for which our service company, CO Services Cayman Limited, provides the registered office can expect to receive a guide to complying with the new regime shortly.

Regulatory update

Administrative fines

In December 2016, additional statutory powers were approved for the Cayman Islands Monetary Authority (CIMA) to impose administrative fines on persons subject to the Cayman Islands regulatory and/or anti-money laundering regime. The additional powers are expected to come into force during 2017 and will put CIMA's enforcement powers on an equal footing with most onshore regulators.

Fund annual returns

In January 2017, an amendment to the reporting regulations that apply to hedge funds registered with the Cayman Islands Monetary Authority has clarified that funds with multiple sub-funds must submit a separate Fund Annual Return for each sub-fund.

Tax transparency reporting update

CRS regulations

In December 2016, the Cayman Islands regulations applicable to registration and reporting under the Common Reporting Standard (CRS) were amended. The amendments were primarily to incorporate details of the enforcement regime, with the introduction of specific offences for non-compliance with the CRS regime that can result in fines or penalties of up to US$61,000 with additional daily penalties for ongoing non- compliance. However, the amendment also introduced a significant change to the registration and reporting requirements for nil reporting entities. Nil reports under CRS (for reporting entities with no reportable accounts) are now mandatory (under FATCA they are still optional) and Cayman Islands investment managers and fund general partners are now required to register and report under CRS, even if, as is likely, they have no reportable accounts and will be submitting a nil report.

Updated CRS guidance notes

In April 2017, the Cayman Islands Tax Information Authority (TIA) issued updated CRS Guidance Notes, which now contain up to date lists of Participating Jurisdictions and Reportable Jurisdictions for CRS reporting purposes. The CRS Guidance Notes and copies of the related regulations can be viewed on TIA's website here.

AEOI Portal user guide

The TIA has issued an updated AEOI Portal user guide v.3.1 on 17 May 2017. This can be accessed online here.

Extension to 2017 deadlines

As 2017 is the first CRS reporting year, the registration and reporting deadlines for 2017 have been extended as follows:

  • TIA's AEOI Portal is now open for CRS registration and for FATCA registration and reporting. It is expected to open for CRS reporting the week of 12 June 2017
  • CRS and FATCA registration deadline is 30 June 2017
  • CRS and FATCA reporting deadline is 31 July 2017
  • Any UK CDOT reporting should be included in the CRS report for the UK

Foundation companies

The Foundation Companies Law, 2017 was enacted in April 2017 and should come into force shortly. This law introduces the Cayman Islands foundation company as an alternative to trust structures, which are unfamiliar to clients in civil law jurisdictions. The foundation company also has the benefit of separate legal personality and perpetual succession, while being more flexible than a traditional company with regard to its ownership and control structures.

Cayman Enterprise City aviation park

In April 2017, Cayman Enterprise City, a special economic zone in the Cayman Islands, added an Aviation Park designed to attract aviation services businesses. The new park supplements its existing offering of an Internet Park, Science and Technology Park, Media Park, Commodities and Derivatives Park and Maritime Services Park.

Litigation updates

Section 238 mergers - recent developments

Three recent unreported judgments considered the process under section 238 of the Companies Law for valuing the shares of a shareholder of a Cayman company who dissents to the terms of a merger or consolidation.

Shanda Games Limited

In what was the first judgment in the Cayman Islands to consider the meaning of "fair value" in the context of section 238 of the Companies Law since the Integra Group decision in 2015, the Court confirmed that: (i) fair value is to be established by the Court undertaking a fresh assessment of all relevant factors, in consideration of the parties' expert evidence and where necessary determining which expert's evidence is to be preferred; (ii) while they are not binding on the Cayman Courts, it was appropriate to consider the Delaware and Canadian authorities decided on similar legislation in those jurisdictions; and (iii) the shares of the minority shareholder(s)

should be valued as a proportion of the value of the company, without the application of a "minority discount" to reflect the fact that the shares represent a minority holding. In a decision that is likely to be relevant to future section 238 applications, the Court also accepted that there is sufficient evidence of the "China effect", which is the theory that for a period from around November 2010, US investors tended to undervalue Chinese companies.

Qihoo Technology Co Ltd

The company had offered the dissenting shareholders US$17 million for their shares and commenced proceedings under section 238 proceedings when this offer was not accepted. As security for the payment of the fair value of the shares, the company agreed to pay US$92 million into Court.

The dissenting shareholders then made an application under GCR O.29 for an Order that the company make an interim payment to them. The Court accepted that at trial the dissenting shareholders would receive at least US$17 million, and so ordered the company to make an interim payment in this amount, rejecting the company's argument that section 238 is a self-contained statutory code which does not permit any discretionary overlap with the interim payment regime in GCR O.29.

Homeinns Hotel Group v Masco Capital Investments Limited et Ors, 7 February 2017 - discovery issues

The Court was asked to determine the types of documents the parties to a section 238 petition should be required to disclose. The Court rejected the company's argument that discovery should take place in the usual way, i.e. by the exchange of lists of relevant documents in each party's possession, noting that in a section 238 application it is the company that will hold the relevant documents. Instead, the Court directed the company to provide certain classes of documents identified by the dissenting shareholdings as relevant to the valuation and in the possession of the company.

In Re CHC Group Ltd directors' rights to appoint provisional liquidators

In China Shanshui Group Limited, it was held that directors needed express authorisation in the company's articles in order to present both a winding-up petition and an application to appoint provisional liquidators. In CHC Group Ltd, the Court held that directors were permitted to apply for the appointment of provisional liquidators without such authorisation where the application followed the presentation of a petition by one of the company's creditors. In distinguishing China Shanshui, McMillan J noted that it was clear that the judgment in that case was only concerned with applications by directors to appoint provisional liquidators which followed a petition presented by the company's directors, and not by a creditor.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions