Cayman Islands: The need to focus on Corporate Governance

Corporate governance in the Cayman Islands primarily follows international standards and best practices,
influenced by various factors including legal frameworks, regulatory bodies like the Cayman Islands Monetary
Authority (“CIMA”), and market expectations. We set out below some of the key principles that regulated entities
in the Cayman Islands are generally expected to adhere to:

1. Transparency: Entities which are regulated by CIMA should provide accurate and timely information to
stakeholders, including shareholders (or interestholders in a limited partnership) and regulators. This includes
financial reporting, compliance filings, and any material changes that could affect shareholders/interestholders.

2. Accountability: The board of directors of a Cayman Islands company (“Board”) may delegate some of its
responsibility to others (e.g. the Board of Directors of a Fund delegating management of its assets to a Fund
Manager) but is nonetheless required to exercise supervisory oversight and control over those delegated
functions and moreover the Board should be accountable for its actions and decisions. This includes setting clear
roles and responsibilities, establishing performance metrics, and ensuring that there are mechanisms in place to
evaluate the performance of the Board and management.

3. Fairness: Depending on the subject matter of the rights and entitlements in question, shareholders
(particularly those in the same class) should be treated fairly and/or equitably, with their rights respected and any
conflicts of interest managed appropriately.

4. Board Effectiveness: The Board should be composed of qualified individuals with the appropriate diverse
skills, experience, and independence to make informed decisions. Regular assessments of Board performance
and training opportunities are encouraged to enhance effectiveness.

5. Risk Management: Effective risk management frameworks should be in place to identify, assess, and mitigate
the internal and external risks that the company faces. This includes financial, operational, legal, and reputational
risks.

6. Regulatory Compliance: Companies must comply with the legal and regulatory frameworks applicable in the
Cayman Islands, including the Companies Act, the Beneficial Ownership Transparency Act, the Securities
Investment Business Act, the Mutual Funds Act, the Private Funds Act, and relevant guidelines issued by
regulatory bodies such as CIMA.

7. Ethical Standards: Companies should promote and adhere to high ethical standards and conduct business
with integrity. This involves establishing codes of conduct, policies to deal with conflict of interest appropriately,
anti-corruption policies, and procedures for reporting unethical behaviour.

By following these principles consistently, Cayman Islands regulated entities can effectively enhance their
corporate governance practices, comply with Cayman Islands legal requirements and thereby avoid fines and
penalties, align with best practices globally, and foster trust among their stakeholders.

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This publication is not intended to be a substitute for specific legal advice or a legal opinion. If you require further advice relating to the matters discussed in this Briefing, please contact us. We would be delighted to assist.