Sep 2024
The Cayman Islands Monetary Authority’s (CIMA) Rule on Corporate Governance for Regulated Entities, Statement of Guidance on Corporate Governance for Mutual Funds and Private Funds, and Rule and Statement of Guidance on Internal Controls for Regulated Entities each contain prescribed and minimum requirements applicable to the governance frameworks of all CIMA-regulated entities, including mutual and private funds.
The primary goal of these regulatory measures is to ensure these entities operate with the appropriate measures of governance and internal control, aligned with global best practices. Regulated funds should review existing (and where applicable implement new) policies and procedures, ensuring they are properly documented in order to address the applicable CIMA requirements and standards.
Summary of Key Requirements
Corporate Governance
The Rule on Corporate Governance for Regulated Entities mandates that the governing body of a regulated entity (such as the board of directors, general partner or trustee) implements a robust governance framework which is commensurate with the size, complexity, structure, nature of business and risk profile of a regulated fund’s operations.
Key responsibilities include:
- Documentation: Maintaining detailed records, policies, procedures and minutes to demonstrate compliance with CIMA’s regulations.
- Annual Meetings: Conducting at least one formal meeting each year at which the governing body will, for example, review strategic objectives, internal controls, risk management and declare any conflicts of interest.
- Outsourcing and Reporting: Even if certain functions are outsourced, the governing body remains ultimately responsible. This includes ensuring that outsourced functions and service providers meet CIMA’s standards, with regular reporting on compliance matters.
Internal Controls Rule and Statement of Guidance (“SOG”)
The Rule and SOG on Internal Controls for Regulated Entities require regulated entities to establish and maintain effective internal control systems. These systems are critical for ensuring orderly and efficient operations, safeguarding assets, maintaining accurate records, and ensuring compliance with regulatory requirements.
How can Conyers Assist your Fund?
Conyers plays a pivotal role in assisting entities with the implementation and ongoing compliance with these new rules:
- Corporate Governance Reviews: Conyers helps governing bodies of funds review and update their corporate governance frameworks and internal controls to meet CIMA’s requirements. This includes assessing existing documentation, including policies and procedures, to identify gaps or deficiencies and advising on necessary improvements.
- Appointment of Independent Fiduciaries: Conyers offers the services of experienced fiduciaries who can be appointed to the governing bodies of Cayman-domiciled funds. These fiduciaries provide independent oversight, ensuring that governance at the fund level meets the required standards of independence and sound management.
- Corporate Secretarial Services: Conyers also offers professional corporate secretarial services, including arranging, managing, and documenting meetings of governing bodies. These services ensure that mandatory meetings are conducted in line with CIMA’s requirements, with appropriate documentation of agenda items and decisions.
- Compliance and Training: Conyers supports ongoing compliance by helping regulated funds establish compliance committees, conduct risk assessments, and implement training programs. This ensures that all personnel are aware of their responsibilities under the CIMA rules and the SOGs, including that the entity’s governance framework remains effective and up to date.
Conyers provides comprehensive support to regulated funds navigating the complexities of CIMA’s governance and internal controls measures. We help to ensure that entities not only comply with the new requirements but also enhance their overall governance practices to meet appropriate market standards. Contact the author or your usual Conyers representative for advice tailored to your specific situation.