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Cayman Funds 2016

CIMA has lots of options including requiring mandatory disclosure in the private placement memorandum (PPM) of certain information on the fund directors, using the website for increased transparency or indeed letting investors do it themselves. The Irish regulator came out with a single number in relation to capacity and this did not appear to improve governance in Irish funds. The fact that CIMA is considering its options and not moving too quickly is a good thing.. Ruddick: CIMA could simply mandate that fi duciary fi rms have to provide that information to investors directly. That way, we know it is accurate, we can give full context and there is no media frenzy as there would be if it went public. And investors can always dig deeper if they wish. We fi nd that giving greater transparency is needed but making it public is a dangerous move. What about auditors and lawyers: would they be next? A list of everyone they work for? Gorter: It should be on a need-to-know basis so that the information is available only to those who require it for legitimate reasons. A public register is open to indiscriminate use and potential abuse—there is a legitimate need for privacy where sensitive fi nancial and commercial information is concerned. I believe robust and effective self-regulation is the way forward with information being supplied to the appropriate party as required. Smith: All those things will be considered. CIMA will review what we have learned and look at what we think is the best way forward. There will also be the usual consultation process with industry as we certainly do not want to introduce something that could become a problem in the future Milgate: Like so many other things we have done, we will listen to our stakeholders and challenge ourselves and consider who is asking and what are their vested interests. Should market forces determine the way forward or should it be a regulatory initiative? But we appreciate the way CIMA is going about this. Golding: We have always been transparent and answered the questions we have been asked. We have been able to work through issues with investors by engaging in a productive dialogue with them. Gorter: To plan legislation that entails significant administration and enforcement costs to address just one of many questions investors have makes no sense to me. We already answer comprehensive questions as part of the investor due diligence process and if we do not comply we don’t get the business. That is the best form of regulation, especially given that most service providers have independent certification performed on their systems and controls. Ruddick: In the context of capacity, investors used to solely ask what the number was but now their questions are much more considered and thoughtful. Capacity is a function of time and ability. It depends what other roles people are doing within a company. We are already answering and have been expanding upon the capacity question for some time now, but as a concern of investors it is no longer the only question on their list. Golding: They dig a lot deeper now. They want more information including what structures and strategies you have experience working with. Ruddick: As an industry we have done a lot to educate investors on all sorts of issues including board composition, form over substance and fundamental governance issues that have been misunderstood. We have also come a long way on capacity. If the real issue is transparency, then there are better ways of solving it than through a public database. “The new LLC vehicle also represents an opportunity to expand our services and improve corporate governance.” Geoff Ruddick CAYMAN FUNDS | 2016 19 “The scope of CRS is huge, with some 97 jurisdictions committed to implementing it by 2018.” Duncan Nicol


Cayman Funds 2016
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