Guidelines on Dividend Payments and Distributions

Under section 6(2)(b) of the Monetary Authority Act (2020 Revision), one of the primary duties of the Cayman Monetary Regulatory Authority International (the “Authority”) is to ensure the stability and integrity of the financial system in the Cayman Islands. In line with this responsibility, the Authority oversees that banks and money services businesses (collectively referred to as “Licensees”), as well as building societies, development banks, cooperative societies, and credit unions, maintain adequate capital, reserves, net worth, liquidity, and provisions for loan losses and other risks to meet their operational and strategic needs.

Considering the evolving nature of the financial services sector, the Authority reminds all Licensees, building societies, cooperative societies, and development banks operating under the Bank & Trust Companies Act (2021 Revision), the Money Services Act (2020 Revision), the Building Societies Act (2020 Revision), the Cooperative Societies Act (2020 Revision), and the Development Bank Act (2018 Revision) (collectively referred to as the “Acts”) of their obligation to notify and/or seek approval from the Authority prior to making dividend payments, capital repayments, or distributions to shareholders, members, or parent companies.

All notifications or requests for approval related to dividend payments or distributions should include the following:

• A calculation of pre- and post-dividend capital adequacy ratios and net worth, as defined in the Acts (if applicable).
• Pre- and post-dividend liquidity and leverage ratio calculations (if applicable).
• A Board of Directors resolution approving the dividend payment.
• A confirmation that the Licensee, building society, credit union, or development bank will maintain the minimum required capital adequacy ratios, sufficient liquidity, and leverage ratios (if applicable), along with adequate provisions for loan losses and other risks necessary to sustain its business objectives.

For any inquiries, please contact the Banking Supervision Division at [email protected].