Industry watchers are regarding the formation of the Cayman Islands Directors Association (CIDA) last week as an important development in the financial industry of the Cayman Islands.
The need for such an association has been talked about in the financial community for quite some time and in response to that need, CIDA has been organized by a group of members of the Cayman Islands Company Managers Association who specialize in providing director services to Cayman Islands companies.
Membership is open to all fit and proper persons who are directors of Cayman Islands companies. The first Annual General Meeting (AGM) of CIDA will be held on or before 19 May at which time the founding members will appoint an executive committee and officers for the ensuing year and make any amendments to the memorandum and articles as may be deemed necessary.
In the last few years, there has been a prolific increase in the number of persons offering director services to Cayman registered companies. In fact attorneys are leaving law firms and accountants are leaving banks and accounting firms to set up company management firms specifically to provide these services.
“This trend has not escaped the notice of the Cayman Islands Monetary Authority (CIMA) and although it has not yet issued a statement on the matter, from speeches made by the Chairman and the Managing Director of the Authority, one can surmise that this trend has given them some concern,” CISA said in a press release on Monday.
“In the absence of a self regulating directors association CIMA could be faced with regulating Cayman directors individually - a daunting task and more or less unprecedented in most jurisdictions. With the amazing growth in the fund sector on the Island most attention will focus on director services provided to hedge funds.
“However there is also a focus on SPVs used in securitization packages. Whether or not there is going to be legislation and regulation affecting the services of directors or whether an Association such CIDA is going to be relied upon to provide self regulation, such matters will affect all directors on the Island whether fund directors, insurance directors, bank directors, or even directors of private companies.”
The focus of CIDA is similar to the Institute of Directors in London. The purpose is to promote and safeguard the interests of directors of Cayman Islands registered companies and to define a code of conduct and best practice for its members which will ensure corporate governance of the highest standard thereby further strengthening the integrity of the Cayman Islands financial centre.
Membership is open only to individuals. In order that all fit and proper persons acting as directors will have an opportunity to join the Association there are two requirements for membership as follows:
(a) the applicant must be a director who is an employee of a CIMA licensed and regulated entity (for example a licensed company management firm) or
(b) the applicant must be sponsored by at least two existing members of the Association
One of the first tasks of CIDA will be to draw up a Code of Practice for Cayman directors so that both they and the public know what is expected from them. There may be supplemental codes for specialized areas of the financial industry and CIDA intends to closely liaise with other associations in this regard. For example, with regard to the funds industry CIDA intends to liaise with AIMA and the Cayman Islands Fund Administrators Association, for insurance they will liaise with the Insurance Managers Association, for banking; with the Bankers Association and so on. Assistance will also be requested as needed from the Law Society and the Caymanian Bar Association and from the Cayman Islands Society of Professional Accountants.
While acknowledging it is important to liaise and consult with other associations in matters concerning corporate governance and board room matters it was thought important for CIDA to be organized and guided exclusively by directors of Cayman Islands companies so that its members could be guaranteed their own collective independent voice in all sectors of the Cayman Islands financial services community.
CIDA has been registered as a company limited by Guarantee and an executive committee and officers, drawn from companies who are licensed by CIMA to provide director services, have been appointed to take the Association through the formative.
The first AGM of the Association will be held on 19 May (two months from the registration of the Association). All persons who become members prior to the first AGM shall be deemed to be founding members. It is anticipated that there will be at least 100 members at that time. At that time an executive committee (nine members) and officers (five members) will be appointed for the ensuing year. Also it is anticipated any improvements to the constitutional documents thought necessary may be made at that time.
Membership in CIDA is available for all directors whether executive or non-executive, fund directors, SPV directors, public and private company directors. Future debates concerning Cayman directors and what springs from them will affect all directors in Cayman.