Draft legislation was recently published to introduce the limited liability partnership (LLP) as a new partnership vehicle in the Cayman Islands. The bill provides for the formation, registration and operation of an LLP as an entity with limited liability and legal personality separate from its partners. The bill also provides for the conversion of existing Cayman partnerships into LLPs and the continuation of foreign LLPs into the Cayman Islands.
The government recently published draft legislation which, when adopted, will require Cayman companies to maintain beneficial ownership registers and for the information in the registers to be made automatically available to the Cayman Islands competent authority through a centralised beneficial ownership platform. The legislation is now expected to pass through the usual approval process in the Legislative Assembly.
The spotlight of the international community is shining more brightly than ever on international financial centres and those that use them, in an effort to reduce aggressive tax avoidance and tax evasion. To assist global efforts to tackle tax evasion and corruption and to increase transparency, the government has amended the Companies Law and proposed a fundamental overhaul of its confidentiality laws.
The Companies (Amendment) Law 2015 has come into effect and will have potential application to all Cayman companies. The law amends the sections of the Companies Law (2013 Revision) which deal with notification of appointments and changes of directors. The law now requires companies to notify the Registrar of Companies within 60 days of first appointments and any subsequent changes in the register of directors and officers.
The means of redress available to unfairly treated shareholders in the Cayman islands are limited. However, under the Companies Law, the Grand Court can appoint inspectors to examine into the affairs of any company and report thereon, on application of one of the company's shareholders. In some instances, the appointment of an inspector is the most timely and cost-effective solution to a dispute.
The Contracts (Rights of Third Parties) Law 2014 has come into force. Subject to certain exemptions, the law allows for the direct enforcement of contractual rights by third parties in contracts to which they are not a party. Previously, contracts governed by Cayman law could be enforced only by parties to the contract, following the common law doctrine of privity of contract.
The Director Registration and Licensing Law 2014 was recently gazetted along with the related regulations, which set out in more detail the registration requirements and fees. The law sets out three categories of director: registered directors, professional directors and corporate directors.
A recent Grand Court decision provides useful guidance regarding 'loss of substratum', one of the bases which justifies a winding-up on just and equitable grounds. The case demonstrates that the Cayman courts are willing to take a commercial view in relation to substratum arguments in appropriate cases in order to assist investors in Cayman companies.
The Exempted Limited Partnership Law (2007 Revision) has been amended by the Exempted Limited Partnership (Amendment) Law 2009. Many of the changes clarify the existing law and place greater reliance on the expressed provisions set forth in the partnership agreement. The amendments took effect on May 11 2009.