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.
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