Corporate Services Regulation

The Companies Management Act grants the Cayman Monetary Regulatory Authority International the authority to regulate company management and corporate services businesses in the Cayman Islands. This responsibility encompasses licensing, ongoing supervision, and enforcement.

Definition of Company Management & Corporate Services

Section 3(1) of the Companies Management Act defines "company management" as the provision of corporate services listed in 3(1)(a) through (l) for profit or reward within or from the Cayman Islands.

Licence Types

According to the Companies Management Act, Cmrai may issue the following types of licences:

• Company Manager Licence - This permits the holder to offer corporate services as specified in Section 3(1) or any additional corporate services that may be prescribed under that section.
• Corporate Service Provider Licence - This allows the holder to provide only the corporate services listed in Section 3(1)(a) through (e).

Regulatory Standards

Cmrai regulates company management businesses in compliance with the following:

• The Companies Management Act, The Monetary Authority Act, and various other local acts, including The Proceeds of Crime Act and the Companies Act.
• The relevant rules, guidance, policies, and procedures issued by Cayman Monetary Regulatory Authority International (Refer to Corporate Services Regulatory Measures).
• The Offshore Group of Banking Supervisors' Statement of Best Practice for Trust and Company Service Providers.

Supervision

The day-to-day regulatory oversight of the sector is handled by Cmrai Fiduciary Services Division, which is responsible for:

• Processing applications for all Company Managers and making recommendations to the Management Committee regarding the issuance (or denial) of licences.
• Ongoing supervision and regulation of licensed Company Managers' activities through the review of regular audited financial statements, management meetings, and periodic detailed reports or audits by external auditors on specific internal controls and systems. Ongoing assessments include capital adequacy, asset quality, management competence, earnings, and liquidity.

On-site/Off-site Supervision

A key objective of the Authority is to maintain a high-quality financial system and a supervisory framework that meets international standards. This is achieved through a combination of off-site and on-site activities, with processes regularly reviewed based on experience and global financial industry developments.

On-site supervision involves evaluating the licensees' control environment and compliance with laws, regulations, and supervisory directives. Inspections test transactions to assess the effectiveness of control environments and ensure fiduciary duties are upheld. As part of this process, discussions with external auditors help review the strength of internal controls, legislative compliance, prudential standards, and the adequacy of provisions.

The goal of the supervisory system is to promote sound fiduciary practices that strengthen the financial sector. In cases where a licensee engages in activities detrimental to the public interest or endangers client assets, the legislation provides remedial measures. These may include revoking or imposing conditions on the licence or making changes to management and directors.