From Solomon Harris

A Cayman Islands Bill proposes extending the time limit to register changes in directors and officers with the Registrar of Companies by thirty days. It also proposes changes to the penalties payable for any default, including limits on the amount payable, and new sanctions for intentional default. It also includes new provisions designed to assist clients who have larger groups of Cayman companies. The Bill is expected to go before the Cayman Legislative Assembly in August.

The Bill

The Companies (Amendment) Bill 2015 (‘the Bill’) which was published in the Gazette on 17 July 2015 proposes extending the existing 30 day time limit to notify changes to 60 days, and to establish penalties for failing to meet the new deadline. The existing deadline is set out in section 55 of the Companies Law (2013 Revision) (‘s. 55’).

The existing s. 55

Under the existing s.55 a Cayman company is obliged:
to maintain a register of all the directors and officers of the company with their names and addresses (the ‘Register’); and
to provide the Cayman Registrar of Companies (‘Registrar’) with a copy of that Register within 90 days of registering the company; and
to notify the Registrar of any changes in respect of the directors and officers within 30 days of the change.
Amendments

The Bill proposes amending s55 so that in future a company must:
provide the Registrar with a copy of the Register within 60 days of the first appointment of any director or officer of the company; and
notify the Registrar of changes in the information contained in the Register within 60 days of the change.

Penalties

The Bill also proposes changes to the existing penalty provisions in section 56.of the Companies Law (2013 Revision) (‘s.56’). At present under s.56 a company which fails to comply with any of the provisions of s55 must pay the following penalty:
CI$1,000 (US$1,220)
Plus CI$100 (US$122) per day for every day during which the default continues.

Further, every director and manager of the company who knowingly and wilfully authorises or permits the default must pay the same penalty (CI$1,000/ US$1,220 plus CI$100/ US$122 per day).

Penalty limits and changes
The penalty for a breach of s55 as amended will be reduced to CI$500/US$610 (but see below for additional penalties for willful default).
Where there has been more than one failure to notify the Registrar of a change in the Register, provided that the breaches occurred within a sixty day period and the Registrar was notified of the changes on the same day, the multiple breaches will be penalized as one breach (penalty of CI$500/US$610 only).
Where breaches of s55 occur in respect of five companies or more, the applicable aggregate penalty shall not exceed CI$2,500 US $3,049, borne equally by the offending companies.

Additional penalties for wilful default

The Bill also proposes new sanctions to apply where the Registrar is satisfied that a breach of s55 has been intentional, and has been knowingly and willfully authorized or permitted. In these cases in addition to the CI$500/US$610 penalty the following penalties apply:
Every company to which the breach relates shall incur a penalty of CI$1,000/US$1,220; and
Every director and officer of the company to which the breach relates shall incur a penalty of CI$1,000/US$1,220, and a further CI$100/US$122 per day for every day during which the default continues.

The Benefits

This is a positive move which makes Cayman more user friendly. In particular, it will help those clients who have large numbers of Cayman entities and who have historically struggled to meet the existing thirty day deadline. At present these face disproportionately large fines for inadvertent breaches. For example, an employee might be sitting on the board of over ten Cayman companies. Were that employee to move house, get married and change their name or leave the company that simple change in information can often take time to filter through to the group’s legal department and for them to then check for any Cayman reporting issues, contact Cayman counsel, and then to arrange for the requisite filing to be made with the Registrar. If passed, this extension will allow more time to process the information, at the same time preserving penalties for willful default.

Solomon Harris

If you require any further information or legal advice on assistance in reviewing the notification procedures for Cayman companies, please contact us at [email protected]
.SOURCE: https://www.solomonharris.com/news-updates/new-time-limits-for-cayman-d-o-notifications