The Cayman Islands is to open up companies and hedge funds domiciled in the jurisdiction, increasing transparency
and disclosure.

The move drew praise from Carne, the fund governance specialist,
saying such proposals represented a “significant step forward” by the British
overseas jurisdiction.

CIMA, the jurisdiction’s monetary authority, has sent
proposals to Cayman-based hedge funds, the Financial Times reported. The
proposals set out plans that would create a public database of funds domiciled on the
island for the first time and will also list the funds’ directors. Consultation
on the recommended changes runs until March 18, 2013.

“In the 24 months subsequent to the onset of the financial
crisis, the BVI Financial Services Commission, the Central Bank of Ireland, the
Jersey Financial Services Commission, the Bahamas Financial Services Board and
the Isle of Man Supervision Commission all updated their corporate governance
codes, laws and/or regulations,” CIMA reportedly said.

CIMA will also require the directors of companies and funds
to register with it and be approved to operate, a move that will bring it into
line with the kind of corporate governance regimes that exist in most onshore
jurisdictions, the report said.

According to CIMA figures on mutual funds, there were 10,841 such vehicles registered at the end of 2012, and 124 fund administrators. There are 226 banks registered in the islands.

A key issue for investors, the report said, was getting a
clearer idea of who their funds’ Caymanian directors are. At the moment, such
information is relatively scant, it said.

Carne

In its comments,Carne said the proposals include a public
database to help due diligence checks on funds. The current Companies
Management Law will also apply to all directors, regardless of where they are
based.

“These proposals represent a significant step forward for
the Cayman Islands, as they will substantially
enhance the levels of regulatory oversight of corporate governance in Cayman
funds. They will help to bring the Cayman Islands funds regime more closely
into step with accepted governance norms elsewhere in the world, enhancing this
jurisdiction’s credibility and helping CIMA to provide a better investor
protection framework,” Peter Heaps, managing director for Carne in the Cayman
Islands, said in a statement.