Are you an exempted NPO? Amended Cayman non-profit legislation clarifies exemptions and adds a new six month deadline

02 Apr 2019

The Non-Profit Organisations (Amendment) Law, 2018 (‘Amendment’) comes into force in the Cayman Islands (‘Cayman’) on 1 April 2019. It clarifies which Non-Profit Organisations (‘NPO’) fall within or outside the law. If you are now within the scope of the law and have not been registered the clock is ticking, you must register within 6 months from the 1 April 2019 to avoid penalties.

What are the changes?
Among the changes it makes to the Non-Profit Organisations Law, 2017 (‘Law’), the Amendment identifies additional organisations which will be exempt, expands the functions of the Registrar (‘Registrar’) of Non-Profit Organisations (‘NPO’), and sets exemptions on the disclosure of confidential information. Importantly it adds a six-month deadline for registration of those NPOs which are not exempt at the time the Amendment comes into force.

What is an NPO?
The Law defines a NPO as including a company or body of persons, whether incorporated or unincorporated, or a trust which is:

(a) established or which identifies itself as established primarily for the promotion of charitable, philanthropic, religious, cultural, educational, social or fraternal purposes, or other activities or programmes for the public benefit or a section of the public in Cayman or elsewhere; and

(b) which solicits contributions from the public (or raises funds under the Amendment) or a section of the public in Cayman or elsewhere.

More information on the Law and registration may be found here.

Why are the changes necessary?
The Amendment aims to clarify which organisations are covered by the Law and which are exempt, as well as make procedural improvements designed to help Cayman meet its international commitments to Anti-Money Laundering (‘AML’) and to Counter the Financing of Terrorism (‘CFT’). The Law, the Amendment and Regulations are positive steps to register and monitor Cayman charities/NPOs and assess any potential risk that they may be used for international AML/CFT. (This was an issue raised by the Caribbean Financial Action Task Force (‘CFATF’) in its 2017 evaluation.)

What are the Exemptions?
The Amendment clarifies what the organisations which are exempted from the requirement to register are:

a) a NPO that is a designated nonfinancial business or profession registered under the Anti-Money Laundering Regulations (2018 Revision);

b) a NPO registered or holding a licence under any of the regulatory laws, other than an entity registered as an excluded person under section 5(4) of the Securities Investment Business Law (2015 Revision);

c) a NPO established as a trust company licensed or registered to carry on a trust business or a controlled subsidiary thereof registered under the Banks and Trust Companies Law (2018 Revision);

d) a government entity (defined as any body of Government and includes a ministry, portfolio, statutory authority, company, board, department or office);

e) an entity assigned by Cabinet with the responsibility of monitoring compliance with the relevant terrorism and anti-money laundering legislation; and

f) any other entity that Cabinet may, by order exempt.

How does the 6 month deadline work?
A NPO which was exempted from an obligation to register under the Law but which is not exempted once the Amendment comes into force will need to register within six months of 1 April 2019 if it wishes to keep soliciting contributions or raise funds from the public. During the registration process it will be allowed to carry on with its activities and not pay registration fees or penalties until it is registered. If, after application, the Registrar refuses to register the organisation as a NPO the organisation must stop raising funds from the public and referring to itself as a registered NPO.

What changes are there in the Regulations?
The Non-Profit Organisations (Registration Application) (Amendment) Regulations, 2019 also come into force on 1 April 2019, bringing administrative changes including a reduction in filing fees for Cayman NPOs. (There is more information on how to register your NPO, here.)

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