24 June 2019 

 

(this does not address the AML changes affecting SIBL Excluded Persons see separate) 

 

Question:

What entities are affected by the SIBL amendments requirements? 

 

Answer: 

The Securities Investment Business (Amendment) Law materially amends the the existing Securities Investment Business Law (SIBL) and it changes the regulatory basis of all SIBL Excluded Person Managers in the Cayman Islands.  

 

Therefore, any entity currently registered as a SIBL Excluded Person providing management to mutual funds will need to re-register with CIMA as a “SIBL Registered Person” by 15 January 2020. 

 

Question:

What steps are required to become a SIBL Registered Person before 15 January 2020. 

 

Answer: 

The main requirements to re-register as a SIBL Registered Person include:

-       The requirement to have 2 directors appointed (whom in turn must be registered with CIMA as a director). The directors can be located anywhere provided they are “fit and proper”.

-       All, directors, shareholders (including UBO’s) and senior officers of the SIBL Registered Person will be assessed by CIMA to ensure that they are fit and proper. In Essence this includes the completion of a CIMA Personal Questionnaire setting out biographic, employment and residence history covering a period of 10 years and the provision of certified due diligence documents to CIMA. 

 

Question:

Who can make the filing for the SIBL Registered Person before 15 January 2020.  

 

Answer: 

Only your registered office has access to the secure CIMA reporting system called “REEFS”, where the re-registration should be made. Most likely they will provide a print out of the form (RRP-160-75) (when it becomes available) or they will create their own form and transfer the data into the REEFS system. 

 

Question:

What are the ongoing obligations and are they different from the prior SIBL Excluded Person regime? 

Answer: 

Yes, there are additional ongoing requirements in addition to the annual declaration including: 

-      All updates to directors, shareholders, UBO’s or senior officers are required to be notified to CIMA within 21 days.

-      Any changes to the information included in the form (RRP-160-75) are required to be notified to CIMA within 21 days.

-      When the SIBL Registered Person adds a fund or ceases to manage a fund then CIMA must be notified within 21 days. 

Question:

Are there additional steps? 

 

Answer: 

Yes, it is our view that re-registering as a SIBL Registered Person will have the effect of bringing the entity within the scope (so called “relevant entity”) of the Cayman Islands Economic Substance requirements under The International Tax Co-operation (Economic Substance) Law, 2018. 

 

This is because “Fund Management” is specifically included as a relevant activity so rather than being excluded from the requirements of SIBL the Cayman Islands Manager would be registered and therefore caught within the scope. 

 

Question:

How can we comply with the Economic Substance requirements? 

 

Answer: 

 

When a relevant entity is subject to the ES test which includes among other considerations whether it is conducting Cayman Islands core income generating activities, and whether it is directed and managed in an appropriate manner in the Cayman Islands relevant to that activity.  The crucial elements consist of whether the entity:

 

 (i)  have an adequate operating expenditure incurred in the Cayman Islands;

(ii)  have an adequate physical presence (including maintaining a place of business or plant, property and equipment) in the Cayman Islands; and

(iii)  have an adequate number of full-time employees or other personnel with appropriate qualifications in the Cayman Islands.

Question:

When do we have to comply with the Economic Substance requirements? 

 

Answer

 

Beginning in 2020 each relevant entity must file an Economic Substance form confirming whether they are in or out of scope and if they are in scope as a relevant entity then they must confirm that they are meeting the substance requirements. 

 

Question:

Can MG provided all the necessary services to comply with Economic Substance in an efficient manner? 

 

Answer

 

Absolutely MG would be delighted to provide bespoke services with minimal impact on your operations. 

Question:

When does this start and what actions are required?     

 

Answer: 

This starts in 2020, when relevant entities must notify the tax information authority whether they are:

 

-      Carrying on relevant activities

-      whether or not all or part of the relevant entity’s activities are subject to tax and the jurisdiction outside became an islands together roof appropriate evidence to support that tax residence

-      the date of the end of its financial year

 

For solutions and if you have further questions please contact victor.murray@mgcayman.com or denise.archer@mgcayman.com

 

 

24 June 2019