Cayman Director Services Company Challenges CIMA’s Private Sector Consultation Process to Promote Fund Governance Reforms

On April 2, 2013, Cayman Private Manager II Limited (CPM), a Cayman director services company and an affiliate of DMS Group, which provides professional directors for many hedge funds and other private funds, filed an application in the Grand Court of the Cayman Islands.  The application sought leave to apply for judicial review of its request for relief based on its allegations that the private sector consultation process used by the Cayman Islands Monetary Authority (CIMA) to reform private fund governance was flawed because CIMA did not satisfy its legal obligations with respect to the consultation process.  The allegations arise out of CIMA’s publication of a consultation paper (Consultation Paper) on January 14, 2013 that outlined various proposed fund governance reforms that will invariably impact Cayman-domiciled hedge funds and other private funds.  For an in-depth discussion of CIMA’s proposed reforms described in the Consultation Paper, see “Cayman Islands Monetary Authority Introduces Proposals to Apply Revised Governance Standards to CIMA-Regulated Hedge Funds and Require Registration and Licensing of Fund Directors,” Hedge Fund Law Report, Vol. 6, No. 4 (Jan. 24, 2013).  If the Court grants CPM leave to apply for judicial review, this could delay any decision-making by CIMA on its corporate governance reform proposals.  This article provides a summary of CPM’s allegations as well as a description of the requested relief.

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