Cayman Islands business owners are not particularly concerned about complying with a new Trade and Business Licensing Law, but they say they are worried about a lack of enforcement against those who do not follow the rules.
That was the consensus among about a dozen businesspeople who gathered at the Government Administration Building on Wednesday evening for a briefing on the new legislation, which is expected to come into force sometime next month.
The new Trade and Business Licensing Law approved by lawmakers in November 2014 basically makes the business licensing process the enforcement mechanism for a range of other laws governing private sector operations in the islands. For instance, license renewal applicants will be required to submit evidence of their compliance with pension and health insurance provisions and planning laws.
In addition, applicants must submit evidence of Caymanian status, police clearance and a bank reference, and they must have gained approval to carry on business “in a public place” if that is necessary for their operation.
The law increases the maximum fine for anyone operating without a license to $10,000, one year imprisonment, or both, for the first offense and $20,000, two years’ imprisonment, or both, for subsequent offenses.
In particular, the legislation targets two practices – illegal vending and “fronting,” the practice of foreign-owned companies operating a Cayman Islands business through a local “straw man” director or manager – seeking to prevent both.
Christine Burke-Richardson, a business owner, told government officials she supports both ideas, but was skeptical about how enforcement would actually occur given the public sector’s limited resources.
“Illegal vending is a major issue in the Cayman Islands,” Ms. Burke-Richardson said. “Everybody’s selling … it’s all over, not just in the tourist areas. It doesn’t make sense to produce a new law and you don’t have the inspectors to deal with these types of people.”
New ‘trade officers’
The director of the Department of Commerce and Investment, Ryan Rajkumarsingh, whose department has wide enforcement powers under the new legislation, including the ability to issue administrative fines and serve warrants for business inspections, said there will be a total of three “trade officers” in place by the time the new law comes into effect.
He said the department will depend to some extent on a level of cooperation from other enforcement agencies, including immigration and customs, to make the system work.
Mr. Rajkumarsingh said he also is sympathetic to business owners’ concerns. “It’s totally unfair when some people are paying their rent and their fees and someone else just comes in and does what they want.”
Commerce Minister Wayne Panton said the enhanced enforcement is a welcome addition, but that government needs to strike a balance between policing noncompliant companies and encouraging legitimate business ventures.
“We don’t want to come across as a police state,” Mr. Panton said.
Under the new legislation, trade officers under the Department of Commerce and Investment can request a warrant from a magistrate or justice of the peace to search the premises of anyone reasonably suspected of operating without a license.
If such a warrant is granted, trade officers – acting in the same manner as a police constable – can enter a business to examine or seize records, equipment or other evidence indicating violations of the Trade and Business Licensing Law.
Companies already have to submit an annual return and a shareholder return to renew their business licenses. Under the new law, license applicants must present a statement confirming that the effective control and benefit of the company is not altered from the return of shareholdings.
Mr. Rajkumarsingh said the ultimate aim is to “merge” the Trade and Business Licensing Law and the Local Companies (Control]) Law, which requires that 60 percent ownership of any locally operating company be Caymanian, unless the company has received a specific exemption.
More public meetings on the issue are expected to be held next month in Grand Cayman and Cayman Brac at dates that have yet be announced.