Cayman Islands’ law firm Appleby has published an update on The Auditors Oversight Law 2011 which was passed by the Legislative Assembly of the Cayman Islands in September 2011 and came into force on 1 May 2012, by Governor’s Order.

Appleby partner Sherice Arman writes that the law provides for the regulation of auditors of market-traded companies. “The main purpose for this legislation is to facilitate the recognition of the auditor oversight regime in the Cayman Islands by other auditor oversight bodies including those in the European Union”.

For the purposes of the law, Arman writes that a market-traded company is defined as an entity (including a company, partnership or unit trust), whether or not incorporated in the Cayman Islands, of which some or all of its transferable securities are admitted to trading on a regulated market (excluding an exempted entity specified as such by regulation).

In her update, she says that most significantly, the Law provides for the establishment of a new corporate body – the Auditors Oversight Authority (the “Authority”) – which functions to regulate and supervise auditors who audit the accounts of market-traded companies. “This includes subjecting “recognised” auditors to systems of quality assurance, investigation and penalties. Recognised auditors are defined as auditors that are entered on the register (which the Authority is required to establish and maintain).