Securities Investment Business In The Cayman Islands – Securities – Cayman Islands

An applicant for registration as a registered person under the
SIBA must submit the requisite APP-101- 75 application form to the
Authority through its REEFS online portal, along with the
prescribed application fee of CI$5,000/US$6,100.

Information and documentary requirements include the
following:

1. client list (to include both regulated and unregulated
   entities);




2. details of all directors, principals of the general partner and
   managing members (as appropriate) (to include at least two natural
   persons);




3. details of senior officers or managers (excluding anti-money
   laundering officers – see further below);




4. details of all shareholders who are natural persons,
   accompanied by a personal questionnaire for each shareholder with a
   shareholding of 10% or more;




5. details of all corporate shareholders as well as the first and
   last names of each 10% or greater ultimate beneficial owner
   (“UBO“), accompanied by a personal
   questionnaire for each UBO;




6. register of directors or equivalent showing persons who act in
   a similar capacity to a director;




7. register of members/ shareholders/ managing members (as
   appropriate) reflecting the beneficial owners and UBOs;




8. an organisational chart in pictorial format outlining whether
   the applicant operates as a single structure or has affiliates
   (both financial and non-financial) by way of common ownership. For
   each affiliate, the applicant must provide the (i) name of the
   entity; (ii) jurisdiction of incorporation; (iii) nature of the
   business; and (iv) name of the regulatory body who has oversight of
   the affiliate’s business, if applicable; and




9. details of the natural persons appointed as the anti-money
   laundering compliance officer, deputy anti-money laundering
   compliance officer (if any), money laundering reporting officer and
   deputy money laundering reporting officer, together with their
   curriculum vitae in each case.

Following registration (which may take up to 6 weeks for
approval) registered persons must notify the Authority within 21
days of any material change in any information filed.

4. MEANING OF “SECURITIES INVESTMENT BUSINESS”

The SIBA contains a wide definition of “securities
investment business” which includes carrying on any of the
following activities by way of business:

4.1. Dealing in securities

Buying, selling, subscribing for, or underwriting securities, or
offering or agreeing to do so, either as principal or agent. A
person will be “dealing” with respect to a particular
transaction only if he continuously holds himself out as carrying
on that business or the transaction is a result of him continuously
soliciting members of the public (e.g. persons other than licensed
or exempted persons).

4.2. Arranging deals in securities

Making arrangements with a view to: (i) another person (whether
as a principal or an agent) buying, selling, subscribing for, or
underwriting; or (ii) a person who participates in the arrangements
of buying, selling, subscribing for or underwriting
investments.

4.3. Managing securities

Managing securities belonging to another person in circumstances
involving the exercise of discretion.

4.4. Investment advice

Giving or offering, or agreeing to give, to persons in their
capacity as an investor or potential investor, advice on the merits
of their buying, selling, subscribing for or underwriting a
security, or exercising any right conferred by a security to buy,
sell, subscribe for or underwrite a security.

4.5. Managing EU Connected Funds

Performing investment management functions, comprising risk or
portfolio management for one or more “EU Connected
Funds”³.

4.6. Marketing EU Connected Funds

Marketing the shares, trust units or partnership interests of an
EU connected Fund to investors or potential investors in a Member
State.

4.7. Acting as Depositary of an EU Connected
Fund

In accordance with the relevant laws and regulations
implementing AIFMD in any Member State.

The SIBA defines “securities” in
quite broad terms. In addition to items such as shares, bonds and
warrants, the definition also includes such things as units in a
unit trust, limited partnership interests, debt instruments,
options, futures and contracts for differences.

4.8. Virtual Asset Service Providers

The SIBA provides for circumstances in which “virtual
assets” are considered to be securities. Virtual assets are
defined as a digital representation of value that can be digitally
traded or transferred and can be used for payment or investment
purposes but do not include a digital representation of fiat
currencies. SIBA also contemplates contracts made for investment
purposes not only on a recognised securities exchange but also on
any virtual asset trading platform in the case of virtual
assets.

5. EXEMPTIONS FROM LICENSING AND REGISTRATION

There are two principal types of exemption for “excluded
activities” and “non-registrable persons”.

5.1. Excluded Activities

Excluded activities are not considered to fall within the
definition of securities investment business. These exemptions take
the person carrying on such activities outside the scope of the
SIBA entirely. These “excluded
activities” include but are not limited to:

1. issuing, redeeming or repurchasing your own securities or
   virtual assets which are securities under the SIBA or making
   arrangements in relation to such activities or dealing in
   securities by applying proprietary assets other than as an
   underwriter;




2. dealing in securities evidencing indebtedness where the person
   dealing provided the financial accommodation which created that
   indebtedness;




3. dealing in securities for risk management purposes in
   connection with a non-securities investment business;




4. dealing in securities or giving legal, accounting or other
   advice as a necessary or incidental part of carrying on a
   non-securities investment business;




5. the provision of finance to enable a person to deal in
   securities.

5.2. Non-registrable Persons

The second set of exemptions relates to “non-registrable
persons” and includes persons:

1. carrying on securities investment business only in the course
   of acting in any of the following capacities:

   1. director,

   
   

   2. partner (limited and general),

   
   

   3. manager of a limited liability company,

   
   

   4. liquidator (including a provisional liquidator),

   
   

   5. trustee in bankruptcy,

   
   

   6. receiver of an estate or company,

   
   

   7. executor or administrator of an estate,

   
   

   8. a trustee acting together with co-trustees in their capacity as
      such or acting for a beneficiary under the trust,

   
   
   
   
   in each case, provided that the person does not hold themself out
   as carrying on securities investment business other than as
   necessary or incidental to their role and they are not separately
   remunerated for such securities investment business activities;
   or




2. carrying on securities investment business in connection with a
   joint enterprise.

6. DIRECTORS REGISTRATION AND LICENSING

The Directors Registration and Licensing Act (the
“DRLA“) seeks to regulate directors of
certain “covered entities” established in the Cayman
Islands, including certain registered persons under SIBA referred
to in paragraph 3 above.

Directors of the SIBA registered person entities (i) carrying on
securities investment business exclusively for one or more
companies within the same group; and (ii) carrying on securities
investment business exclusively for Sophisticated Investors, are
required to register or be licenced with the Authority pursuant to
the terms of the DRLA.

The DRLA applies to each category of director whether or not the
director is resident in the Cayman Islands.

Fees are payable at the time of application and annually on or
before the 15th January in each year.

Registration as a registered director is administered through an
online process and confirmation of registration is usually within
48 hours. Licensing as a professional director (appointed for
twenty or more covered entities) and/or corporate director is also
administered through an online process and confirmation of
licensing is usually within four weeks. Certain requirements must
be satisfied before registration or licensing is granted by the
Authority.

Significant financial penalties and criminal sanctions apply in
the event that a person acts as a director without first being
licensed or registered under the DRLA and in the event that a
person fails to inform the Authority of changes to their original
registration or licence application. For information on the DRLA,
please see our publication “Directors Registration and Licensing in the Cayman
Islands”.

7. GENERAL PROVISIONS

The following key provisions of the SIBA are of particular
interest:

1. a contract, transaction or instrument entered into by a person
   in the course of carrying on securities investment business in
   contravention of the requirement to be registered or obtain a
   licence under the SIBA shall not be rendered unenforceable by
   reason of a failure to be registered or obtain a licence required
   by the SIBA;




2. subject to certain exceptions, notification to the Authority
   (in the case of registered persons) or the Authority’s approval
   (for licensees) is required to transfer or dispose of any shares or
   interests of a company or partnership registered or licensed under
   SIBA;




3. licensees and registered persons shall separately account for
   the funds and property of each client and for the licensee’s
   own funds and property;




4. a licensee must have their accounts audited annually by an
   approved auditor and filed within six months of the end of the
   licensee’s financial year;




5. a licensee requires the Authority’s approval to open
   outside the Cayman Islands a subsidiary, branch, agency or
   representative office or to change its name.

The SIBA also contains provisions relating to enforcement by the
Authority including powers to revoke registration or licenses,
replace directors/officers, appoint controllers, and to make court
applications for injunctions, restitution orders and warrants to
enter and to search premises.

8. INSIDER DEALING AND MARKET MANIPULATION

The SIBA created two new offences in the Cayman Islands. They
are:

1. Creation of false or misleading market –
   a person is guilty of this offence if he or she creates or does
   anything which is calculated to create a false or misleading
   appearance of active trading in any listed securities⁴
   or with respect to the market for or price of any such securities;
   and




2. Insider dealing – subject to various
   defences available under the SIBA, a person commits the offence of
   insider dealing if he or she has information as an insider and he
   or she deals, or encourages another person to deal in listed
   securities that are price-affected securities (meaning that the
   information, if made public, would be likely to have a significant
   effect on their value) in relation to the information possessed, or
   he or she discloses the information other than in the proper
   performance of his or her employment, office or profession, to
   another person.

A person convicted of either of these offences is liable to a
fine of up to CI$10,000 (approximately US$12,500) and imprisonment
for up to 7 years.

9. DE-REGISTRATION OF A REGISTERED PERSON

A registered person may apply to the Authority for
de-registration where a registered person ceases to carry on any
regulated activity under Schedule 2 of the SIBA in circumstances
where the registered person is (i) being wound up; (ii) merging
with another registered person; (iii) being transferred to another
jurisdiction; or (iv) has never carried on business. Prior to
applying for de-registration, all fees and regulatory filings must
be submitted and up to date and any queries settled with the
Authority. The de-registration process is the same for exempted
companies, partnerships, unit trusts and foreign companies. The
Authority aims to provide a letter confirming de-registration
within two to four weeks of the filing being made.

In order to de-register the following core requirements must be
fulfilled, regardless of the reason for de-registration:

1. a DRP-103-75 application form;




2. a letter notifying the Authority of the applicant’s
   intention to de-register the registered person in accordance with
   section 5(4B) of the SIBA must be submitted within 21 days of
   ceasing to carry on a regulated activity;




3. a fee of CI$500 (US$610);




4. a certified copy of directors’ resolutions indicating the
   date on which the registered person ceased to carry on any
   regulated activities or, alternatively, stating that the registered
   person never carried on such business, must be filed;




5. an affidavit by the directors of the registered person must be
   filed deposing to the following: (i) the date the registered person
   ceased conducting securities investment business; (ii) the reason
   for cessation of business; (iii) the registered person has operated
   in accordance with its constitutional documents; (iv) all client
   relationships have been properly terminated or transferred (v) the
   registered person has not conducted its securities investment
   business and has not wound up such business in a manner that is
   prejudicial to its clients and creditors; and (vi) the registered
   person intends to either continue as a legal entity in the Cayman
   Islands, apply to be struck off the relevant register or merge with
   another registered person.

Where an entity applies to de-register having ceased carrying on
securities investment business but wishes to continue as an entity,
the resolutions and affidavit above must provide (i) the date that
the registered person ceased conducting securities investment
business; (ii) that the entity will continue to operate as a
particular entity or company; and (iii) the purpose of the entity
going forward. This scenario is not currently captured in the
DRP-103-75 form and the Authority has expressed that as a result,
sections A03-A07 of the form may be left blank, so long as the
letter submitted with the application for de-registration addresses
the basis for this omission.

The following additional documents are required by the
Authority, depending on the circumstances in which the registered
person ceases to carry on regulated activity:

1. Voluntary winding up:

   1. notice of voluntary winding up: Companies Winding Up Rules,
      2018 (“CWR”), Form 19;

   
   

   2. consent to act: CWR, Form 20; and

   
   

   3. declaration of solvency: CWR, Form 21




2. Court supervised winding up: A certified copy of the
   Supervision or Winding Up Order issued by the Grand Court is
   required.




3. Merger: An application to the Authority for prior approval of
   the merger must be submitted, accompanied by:

   1. resolutions of merging and surviving parties;

   
   

   2. plan of merger and appendices; and

   
   

   3. any other such documents the Authority may require.




4. Transfer to another jurisdiction: A directors’ affidavit
   must be provided deposing to the following: (i) the reason for the
   transfer and the name of the jurisdiction to which the Registered
   Person is being transferred; (ii) the Registered Person has
   operated in accordance with its articles of association and
   constitutive documents; and (iii) the transfer is not prejudicial
   to the Registered Person’s clients or creditors.

10. ANTI-MONEY LAUNDERING, COUNTER TERRORIST FINANCING AND
COUNTER PROLIFERATION FINANCING COMPLIANCE

SIBA regulated entities are considered to be carrying on
“Relevant Financial Business” as defined in the Proceeds
of Crime Act (2020 Revision) (the
“POCA“) and are subject to the POCA, the
Anti-Money Laundering Regulations (2023 Revision), (the
“Regulations“) and the Guidance Notes on
the Prevention and Detection of Money Laundering, Terrorist
Financing and Proliferation Financing in the Cayman Islands (the
“Guidance Notes“, collectively with the
POCA and the Regulations, the “AML
Regime“) issued by the Authority.

Pursuant to the AML Regime, SIBA regulated entities are required
to have internal reporting procedures in place to (1) identify and
report suspicious activity; (2) monitor and ensure internal
compliance with laws relating to money laundering; and (3) test
that their AML system is consistent with the Regulations and the
Guidance Notes (the “Procedures“). As
part of the Procedures SIBA regulated entities are required to:

1. adopt a risk based approach to identify, assess and understand
   money laundering, terrorist financing and proliferation financing
   risks, including the identification of assets subjected to targeted
   financial sanctions and clearly document or keep a written record
   of the risk analysis approach taken;




2. put in place identification and verification procedures to
   identify customers and observe lists of countries published by any
   competent authorities that are non-compliant and do not
   sufficiently comply with Financial Action Task Force
   recommendations and undertake ongoing due diligence measures on the
   basis of materiality and risk;




3. have in place record keeping policies and procedures and due
   diligence information and ensure that transaction records should be
   available without delay upon a request by competent
   authorities;




4. have internal systems and controls relating to audit function,
   outsourcing, employee screening and training which is proportionate
   to the nature, scale and complexity of its activities;




5. appoint an Anti-Money Laundering Compliance Officer
   (“AMLCO“), to act as compliance officer,
   who shall have overall responsibility for ensuring compliance by
   the SIBA regulated entity with the AML Regime; and




6. appoint a Money Laundering Reporting Officer
   (“MLRO”), to act as MLRO and a Deputy
   MLRO (“DMLRO“), who shall have
   responsibility for receiving reports of, investigating and
   reporting suspicious activity in accordance with the Guidance
   Notes.

The Guidance Notes provide, amongst other things, that financial
services providers should, on a regular basis, conduct an
anti-money laundering/ countering of terrorist financing/
countering of proliferation financing
(“AML/CFT/CPF“) audit, the frequency of
which should be commensurate with the entity’s nature, size,
complexity and risks identified during its risk assessments. The
Authority is empowered to require that entities registered as
excluded persons have their AML/CFT/CPF systems and Procedures
audited by suitably qualified entities to check for compliance with
the Regulations.

While the ultimate responsibility for maintaining and
implementing satisfactory Procedures remains with the SIBA entity,
the obligations may be met by delegating or outsourcing those
functions, including to persons who are subject to the anti-money
laundering requirements of a country assessed as having a low risk
of money laundering, terrorist financing and proliferation
financing. AMLCO, MLRO and DMLRO appointments and any changes
thereto must be notified to the Authority together with certain
prescribed information, including the individuals’ curriculum
vitae in each case. For further information on the AML Regime,
please contact your Conyers contact.

11. FOREIGN ACCOUNT TAX COMPLIANCE ACT (FATCA)

11.1. What is FATCA?

FATCA is a US federal law that aims to reduce tax evasion by US
persons. FATCA has significant extra-territorial implications and,
most notably, requires foreign financial institutions
(“FFIs“) to report information on
accounts of US taxpayers to the US Internal Revenue Service
(“IRS“). If an FFI fails to enter into
the necessary reporting arrangements with the IRS, a 30%
withholding tax is imposed on US source income and other US related
payments of the FFI.

In order to facilitate reporting under and reduce the burden of
compliance with FATCA, the Cayman Islands has signed a Model 1B
intergovernmental agreement with the US (the “US
IGA“). The US IGA allows Cayman Islands entities that
are FFIs to comply with the reporting obligations imposed by FATCA
without having to enter into an agreement directly with the IRS.
Instead, a Cayman Islands FFI may report directly to the Cayman
Islands Tax Information Authority (the
“TIA“) and, provided it complies with
the relevant procedures and reporting obligations, will be treated
as a deemed compliant FFI that is not subject to automatic
withholding on US source income and other US related payments.

11.2. FATCA Classification for Cayman Islands Managers
and Advisers

Although Cayman Islands managers and advisers fall within the
definition of Investment Entity (and therefore FFI), the US IGA
contains an exemption for a Cayman Islands FFI that qualifies as an
Investment Entity solely because it (a) renders investment advice
to, and acts on behalf of, or (b) manages portfolios for, and acts
on behalf of, a customer for the purposes of investing, managing,
or administering funds deposited in the name of the customer with a
participating FFI. Accordingly, Cayman Islands managers and
advisers will generally not be required to register with the IRS
and report on their own account. They may, however, be required to
self-certify as non-financial foreign entities.

11.3. Required Steps

Cayman Islands Reporting financial institutions
(“FIs“) are required to have a Global
Intermediary Identification Number
(“GIIN“) directly from the Internal
Revenue Service of the United States. For newly incorporated funds
qualifying as a Cayman Islands Reporting FI, a GIIN should be
obtained as soon as possible and, in any event within 30 days of
commencing business.⁵ Further, Cayman Islands Reporting
FIs are required to identify reportable accounts and report certain
designated information to the TIA in accordance with prescribed
timeframes. Significant penalties and/or enforcement action can
result in the event of a failure to report. All Cayman FIs that
have reporting obligations are required to notify the TIA by 30
April in the first calendar year in which they are required to
comply. Full reporting is then due on or before 31 July in each
year. For further information on FATCA please see our publication
“The Impact of FATCA on Cayman
Entities”.

12. COMMON REPORTING STANDARD (CRS)

12.1. What is CRS?

CRS is a global information exchange regime developed to
facilitate and standardize the automatic exchange of information
(“AEOI“) on residents’ assets and
income between participating jurisdictions on an annual basis. The
Cayman Islands have implemented the CRS through The Tax Information
Authority (International Tax Compliance) (Common Reporting
Standard) Regulations (2021 Revision) pursuant to the Tax
Information Authority Act (2021 Revision) (the “TIA
Act“).

Similarly to FATCA, the CRS requires certain Cayman Islands FIs
to identify the tax residency of their account holders and then to
report information on reportable accounts held by individuals and
entities. For the CRS there are notification requirements for both
reporting and non-reporting FIs.

For CRS purposes, FI is a broad concept and includes, amongst
other things investment entities whose income is primarily
attributable to (re)investing or trading in financial assets, if
the relevant entity is “managed by” another FI. In some
cases, organisations that have been unaffected by FATCA may find
that they are required to comply with CRS. Some of the key
differences between FATCA and CRS are as follows:

• CRS is based on tax residency rather than citizenship;




• more Cayman entities will be affected as the scope of
  applicable exemptions is narrower;




• thresholds for de minimis financial accounts are
  significantly reduced under the CRS compared to FATCA;




• The CRS does not impose withholding tax.

12.2. CRS Classification for Cayman Islands Managers and
Advisers

Cayman Islands managers and advisers are classified as reporting
FIs for CRS purposes and are required to put in place appropriate
policies and procedures regarding CRS compliance. Unlike other
investment entities such as investment funds, equity and debt
interests of investment managers or advisers will only be treated
as a “Financial Account” if the interests were created to
avoid the reporting obligation. They may therefore confirm in their
notification form on the AEOI Portal that they have no financial
accounts and will not have a reporting obligation unless and until
such confirmation is no longer correct.

12.3. Required Steps

Cayman Islands Reporting FIs are required to establish and
maintain written policies and procedures to comply with and apply
the CRS. Similar, to FATCA, Cayman Islands Reporting FIs will need
to adapt their onboarding procedures for new investors in order to
capture the requisite information that needs to be reported in
order to be compliant with the CRS. The TIA has issued tax
self-certification forms to assist Cayman Islands Reporting FIs
with their reporting requirements. Cayman Islands Reporting FIs
should have all new and existing clients complete
self-certification forms.

A Cayman Islands FI, being either a Cayman Islands Reporting FI
or a Non-Reporting FI, must notify the TIA no later than 30 April
in the first calendar year in which it is required to comply with
the reporting obligations. On or before 31 July each year, a Cayman
Islands Reporting FI will also be required to report certain
information in respect of each of its “reportable
accounts” to the TIA. For further information on the CRS,
please see our publication “The Cayman Islands and the Common Reporting
Standard Issued by The Organisation for Economic Co-Operation and
Development”.

13. POWERS OF REGULATION, SUPERVISION AND INVESTIGATION

The Authority is responsible for supervision and enforcement in
respect of persons to whom the SIBA applies and the investigation
of persons who they reasonably believe to be carrying on or
purporting to carry on securities investment business without being
registered or licenced.

The Authority’s powers include the ability to obtain regular
returns and conduct on-site inspections in order to determine that
a registered person or licensee is in compliance with the SIBA, The
Anti-Money Laundering Regulations and is otherwise in a sound
financial condition.

If the Authority has reasonable grounds to believe that a
registered person or licensee will become unable to meet its
obligations when they fall due, has failed to comply with a
condition of its registration or licence or may be in breach of the
requirements of the SIBA or AML Regime, it may, at the expense of
the registered person or licensee (where applicable):

1. revoke the registration or licence;




2. amend, revoke or impose conditions or further conditions upon
   the registration or licence;




3. apply for a Court order to protect the interests of clients or
   creditors including an injunction or restitution or disgorgement
   order;




4. publish breaches in the Cayman Gazette or other official
   publication;




5. require the registered person or licensee to obtain an
   auditor’s report on its anti-money laundering systems and
   procedures;




6. require the substitution of any director or officer or the
   divestment of ownership or control;




7. appoint a third party to advise the registered person or
   licensee on the proper conduct of its affairs and report back to
   the Authority;




8. appoint a person to assume control of the registered person or
   licensee’s affairs having the powers of a receiver or
   manager;




9. report breaches of The Anti-Money Laundering Regulations to the
   Director of Public Prosecutions; or




10. require such other action to be taken by the registered person
    or licensee as the Authority reasonably believes necessary.

If the Authority has reasonable grounds for suspecting that a
person is carrying on securities investment business in
contravention of the requirement to be registered or licensed, the
Authority may, by written notice, require that person or any other
person to provide such information, and/or produce documents which
may reasonably be required for the purpose of investigating the
suspected contravention. In such circumstances, the Authority may
also require that person or any other person to attend an interview
and answer questions relevant for determining whether such
contravention has occurred. Officers, servants or agents of the
Authority may, with a warrant, also enter premises for the purposes
of seeking information or documents, asking questions or making
copies of documents.

Under the SIBA, the Authority may seek court orders to wind up a
company or dissolve a partnership which has carried on securities
investment business in contravention of the SIBA. The Authority may
also seek orders to restrain or remedy such contraventions, or to
restrain the disposal of assets or to require the restitution of
profits to persons which have, for example, suffered loss as a
result of the contravention.

In certain circumstances failure to comply with a direction
given by the Authority can result in fines of up to
KYD100,000/USD121,950 or imprisonment of up to five years (or
both).

14. ADMINISTRATIVE FINES REGIME

The Authority has significant new powers to impose
administrative fines on licensed and regulated individuals and
entities. These range from non-discretionary fines of
CI$5,000/US$6,100 for a minor breach to CI$1,000,000/US$1,220,000
for a very serious breach. The Authority would be able to impose
cumulative fines of up to CI$20,000/US$24,390 for a single minor
breach. It is important that individuals and entities take note, as
contraventions or failures to act could give rise to fines. The
Monetary Authority (Administrative Fines) Regulations (2022
Revision) (the “Regulations“) contain
the prescribed provisions attracting fines, the basis upon which
discretion may be exercised, the process for imposing fines,
appeals, payment and enforcement. Schedule 1 of the Regulations
sets out the prescribed regulatory law provisions and corresponding
breach categories in relation to a wide range of legislation
including the SIBA – these categories range from offences
considered to be minor in nature to breaches categorised as very
serious.

15. ECONOMIC SUBSTANCE REQUIREMENTS

Pursuant to the International Tax Co-operation (Economic
Substance) Act (2021 Revision) (the “ES Act”), all Cayman
Islands entities must notify the TIA of, amongst other things,
whether they are carrying out relevant activities and if so,
whether or not the entity is a relevant entity by way of filing an
Annual Economic Substance Notification. A registered person who
constitutes a “relevant entity” and who acts as a
discretionary manager of an investment fund (as defined in the ES
Act) will be deemed to be carrying on the relevant activity of fund
management business for the purposes of the ES Act and accordingly
will be subject to the economic substance test set out in the ES
Act. See our publication “Cayman Islands: Economic Substance
Requirements” for further details.

Footnotes

1. A “sophisticated person” is someone
regulated by the Authority or an overseas regulatory authority
recognised by the Authority or whose securities are listed on a
recognised securities exchange or who, by virtue of knowledge and
experience in financial and business matters, is reasonably to be
regarded as capable of evaluating the merits of a proposed
transaction and participates in each transaction with a value or in
monetary amounts of at least CI$80,000 (approximately
US$100,000).

2. A high net worth person is an individual whose net
worth is at least CI$800,000 (approximately US$1,000,000) or any
person that has total assets of not less than CI$4,000,000
(approximately US$5,000,000).

3. An “EU Connected Fund” is a fund (open or
closed ended) which is either (i) managed by a person whose
registered office is in a Member State (being either a member of
the EU or a part of the EEA in which the AIFMD has been
implemented) and whose regular business is managing one or more
alternative investment funds; or (ii) marketed to investors or
potential investors in a Member State, in each case, as notified to
the Authority as being identified to the relevant competent
authority of a Member State in accordance with the relevant law
implementing the AIFMD in the Member State.

4. For these purposes, a “listed security”
means any security which is listed on the Cayman Islands Stock
Exchange or a virtual asset trading platform which is a recognised
securities exchange.

5. Tax Information Authority (International Tax
Compliance) (United States of America) Regulations (2021 Revision),
s. 4(2).

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.