The new law which establishes a registration regime for directors and a licensing regime for professional and corporate directors has been published in the Government Gazettes.
The law, which was passed in the last sitting of the Legislative Assembly in April, was subject to changes at the committee stage and has been redrafted.
It now includes an amended appeals process for directors whose registration or licensing application has been rejected by the Cayman Islands Monetary Authority.
Within 14 days of receiving a refusal notice from the authority, directors can request the reconsideration of the decision. The authority then has 21 days to reconsider the refusal and communicate the result of the reconsideration to the applicant. The initial refusal will not take effect until the reconsideration process has been concluded.
When the authority revokes a registration or license, directors have the right to appeal to the Grand Court against the decision by the authority within 21 days of the effective date of the revocation.
The initial bill did not include a reconsideration process and only gave directors seven days to appeal a revocation at the Grand Court.
Until now, there was no registration or licensing requirement imposed on individuals who act as directors of entities registered with CIMA. Directorship companies in turn had to be licensed and directors of licensees had to be approved.
Wayne Panton, minister for financial services, said during the debate of the bill in April that this regulatory gap resulted in challenges for CIMA in supervising and sanctioning individuals who are considered to be unsuitable as directors of regulated entities.
The law represents therefore another element to the enhanced oversight of directors of mutual funds regulated by the Mutual Funds Law, as well as directors of excluded persons under the Securities Investments Business Law, he said.
George Town MLA Winston Connolly raised the lack of an appeals process during the debate. He also asked for the inclusion of a definition of fund manager, which is now included in the law.
The penal sanctions of the law were clarified in that directors who are acting without registration would be subject to a fine of up $50,000, a maximum prison sentence of 12 months, or both.
The maximum fine increases to $100,000 for professional directors acting without a license.
Failure to update any changes in the submitted registration information will result in a fine of $20,000 upon conviction. Under the bill licensed and registered directors have to inform CIMA of any significant changes to the information supplied with their application within 21 days.
Regulations to the law, including details on the fee levels and the application process, are now being drafted. The law will come into force after the regulations have been approved by Cabinet.