Paul Smith has taken on the role of principal at Genesis Fiduciary. The appointment of Smith, who joins Dawn Howe, a former partner at Walkers; and Edel Andersen, will bolster the firm’s offering following the release of the Mutual Funds (Amendment) Bill, 2020 and Private Funds Bill, 2020, Genesis said in a press release.
Both bills are set to be debated by the Legislative Assembly on 30 Jan. and expected to be passed into law. The Mutual Funds (Amendment) Bill, 2020 introduces a registration requirement for open-ended funds of 15 or fewer investors, which previously may have been exempt from registering with the Cayman Islands Monetary Authority. If the bill becomes law, these funds will also be subject to CIMA’s supervision and regulatory oversight.
The Private Funds Bill, 2020 in turn, requires closed-ended funds, namely private equity, real estate and infrastructure funds, to register with CIMA and be subject to that body’s supervision.
Private funds will also need to be audited each year by a CIMA-approved auditor and follow new rules for retention of records, cash monitoring, valuation of assets, the safekeeping of assets and title verification and the identification of securities they hold.
Genesis said the firm also sees demand from clients who are subject to the International Tax Co-Operation (Economic Substance) Law, 2018 and have to demonstrate economic activity through staffed offices or outsourcing arrangements on island.
“In 2020, many clients are focusing on establishing demonstrable substance in the Cayman Islands by using Cayman resident directors, who need to engage in client businesses to a much greater depth than previously seen,” Genesis said. This can include oversight of risk management, FX hedging, fund accounting, transfer pricing and cash management.
Cayman lawmakers will consider proposed changes to the economic-substance rules at the end of January such as, penalties for late filing of the economic-substance return, clarification of exchange of information provisions, monitoring and verification of outsourcing of core-income-generating activities and the removal of the anti-avoidance provisions.
All legal entities will be required to file an economic-substance notification before they can file their annual return with the registrar. Entities who do not submit a notification will not be able to file their annual return, and therefore will not be in good standing in due course.