Minister seeks to reassure local traders
Minister Joey Hew in the LA (file photo)
(CNS): Commerce Minister Joey Hew has said that amendments to the Local Companies Control Law, which were made to comply with the latest regulatory developments in the financial world and to keep Cayman from a European blacklist, will not undermine local traders. The amendments will remove the ban on exempted offshore companies from doing business in the Cayman market, but Hew, who presented the bill, said that any offshore entity which decides it wants to trade locally will still need a local partner or to go through the process of acquiring the necessary licence.
Speaking in the Legislative Assembly late Monday, Hew was at pains to reassure the local business community that any exempt companies choosing to take advantage of the change in the rules will still need to go through the full process that any foreign company wanting to do business here without a Cayman partner would need to do.
With concerns that there could be a massive influx of competition from foreign-owned companies that will threatened the livelihoods of Caymanian business owners, Hew stressed the fact that all of the usual safeguards will still apply. If the exempt companies wanting to trade locally take advantage of the new equitable trading environment, which is a requirement from the OECD as well as the EU, he said they would still need to fulfill the strict criteria relating to the local companies control regime.
The change to the legislation is largely to remove the restriction on offshore companies carrying on business in the Cayman Islands to address the different treatment between exempted companies, which are currently prohibited from carrying on business here, and ordinary companies, which may carry on business locally.
The LCC law was originally drafted to protect Cayman business from overseas. Therefore, Hew said, careful consideration will be given to applications to ensure that they comply with all the laws to ensure that if an exempted company does choose to do business here, they do not get an advantage.
So, in future, if offshore firms want to trade in the local market, if they do not have a Cayman partner they will be subject to the usual considerations of competition, economic, social and environmental impacts of the business, the expertise they have and number of work permits required and the effect on existing local business in the given field.
“I can assure local businesses that the law will still protect Caymanians. We are not giving exempted companies carte blanche to do business here,” he said, as he noted that the amendments to the legislation were about removing the ban on exempted firms trading locally to meet the OECD’s Forum on unfair tax practices requirements. “We are still committed to keeping a level playing field,” he said, indicating that foreign companies wouldn’t be given an advantage over local businesses.
He said no matter what is required of the Cayman Islands to meet the international demands on the financial sector, Cayman would retain the right to decide who trades locally.
However, concerns have been raised by the opposition and the small business community that the Trade and Business Licensing Board, which oversees the application process for local company control licences, has been derelict in its duties and has already given out way to many licences to foreign companies, as there are now 252 current LCC licences.
Hew accepted that the regime has grown over the last forty years from a handful of major companies that Cayman needed to develop its economy, such as CUC, Cable and Wireless and the fuel companies. He revealed that around 130 of the existing 252 licences are held by property owners and most of the rest are developers and project managers. He said there were around two dozen financial firms and 17 hotels.
The minister also acknowledged that it may be time for government to take a closer look at who is holding LCC licenses and why but in the meantime he said the new amendments to the law would still see Caymanian businesses protect from overseas competitors. He said the amendments don’t change the duties of the board to protect local trade and carefully consider new applications.
There are, however, other concerns that the minister cannot be certain about. Many people in the offshore industry and members of the opposition are still questioning whether or not the new regime requiring exempted companies to have an economic presence here will actually lead to them needing a Cayman partner or an LCC licence to meet that substance test.
Premier Alden McLaughlin and Financial Services Minister Tara Rivers both admitted several times during the debates on the bills relating to this significant change to the offshore sector that the definition of ‘economic substance’ has still not been fully articulated.
Questions remain as to whether an office, a receptionist and the filing of local accounts in furtherance of their offshore business will be enough to satisfy the test or if they will need a local trading licence as evidence of business operations here.
Category: Business, Financial Services
Joey, let’s see what the actual revised Companies law you guys passed says:
“An exempted company that holds a licence to carry on business in the Islands under ANY APPLICABLE LAW, shall from the date of issue of such licence continue for all purposes as if incorporated and registered as an ordinary resident company under and subject to this Law….”
Any applicable law! Could this be interpreted as meaning builder’s law, company management, fund management? Lawyers will have a lot of fun with this.
Joey Hew embarrasses himself spouting nonsense. Tara Rivers and Alden McLaughlin need to set the record straight and demand Hew stays out of these matters that he clearly does not understand.
Not sure that the EU will swallow this. The intention is to apply a substance test. If you then layer on a requirement for the business to be majority-Caymanian owned, most will not go down this path and thus substance will not be established.
This is absolutely true. I don’t believe that BVI is requiring exempt companies to have local ownership. I understand this requirement if the companies will be offering products or services to locals and expats. The vast majority of companies do not care about offering services to locals. They just want to operate their company and offer their services in other countries. Hopefully, there will be a separation of the requirements for the two.
This gowerment knows no bounds when it comes to selling out its people 7000 work permits to one local scumbag prostitute alone should do the trick. Yes Cayman you were warned but you still went there with your little vote and the ppm over sweetened Koolaid now you have to Tek wood!!! Inna yeh ras ! Bwoy
Exactly, tek we inna de ras…no language skill, canna talk a taall.
Poor Joey is confusing himself and the country again. It would be better if he just smiled instead of speaking. He’s as clueless as Jon Jon on issues
That is a stretch.
Joey has less formal education or qualifications than Jon Jon. He has much education as McKeeva Bush but went to college. That should tell you everything you need to know about Cayman’s politicians like Joey Hew and his suitability for leadership to take his party or the country forward.
Forward to Jamaica style politics.
CNS- Do you know if government can do business with foreign companies that aren’t licensed to do business in Cayman?
I’ve seen government doing this. They use our public funds to support foreign vendors instead of investing in our own local businesses.
Minister Hew said that companies doing business in Cayman have to meet the LCCL, just wondering if government has exempted themselves from this law. After all, they are one of biggest purchasers of services in the country.
Definitely been hurting our business since Govt goes abroad instead of buying local.
Ditto
Wouldn’t that be something if they contract with unlicensed vendors!
And then they make speeches that they are supporting local businesses, while they are spending our public dollars with foreigners.
These MLA better start caring about Caymanians. We are the ones that voted them in office.
Does anybody remember Brexit, wait and see what the outcome of Brexit is before we change any laws because of the EU. We have the right to wait and see what the outcome is with England and the EU.
Don’t worry capital rich families, you can still rip off the majority of the local population by extracting your oligopolistic profits.
I wonder if the Minister knows what he is said in the first paragraph of the article.
The Premier lambasted the opposition, expecially MLA Suckoo and Bryan for daring to ask the pertinent questions that their constituents and business persons are looking for answers to.They rushed to committee stage to fix an anomaly pointed out to them by MLA Suckoo in the bill they were debating. Apparently niether the Premier nor his group of technocrats that he mentioned so many times in his debate had seen it. To thank MLA Suckoo he tried to embarrass him. It must be so difficult to try to work with this Premier who seem to think that the stars, sun and moon hangs from his well coifed bouffant.
Better watch what’s happening in the east ,eh hu ,trump has pulled his armed forces out , giving way for Iran to move in to where they want to be ,,at Israel ,,,,anyone knows what that is leading to ?
Yep, some of us surely know. You better get ready!
Absolutely sick and bloody tired of politics. Left shit, right shit, bad shit, no shit, all shit.
All we have ever wanted is honest and decent shit (HANDS).
A new party is formed, HANDS, hands down the best.
Vote for me, bitches, help me make me rich.
This Minister, on this occcasion, together with their Chief Officers and other hard working civil servants were near impeccable in their handling of this change. The levels of consultation and engagement as to what had to be done were excellent, and the interests of Caymanians at the forefront of considerations. Sleep well Cayman. These guys have a good handle on things.
No matter how much they say it that won’t make it true.
don’t worry locals…your uncle tom fronting scam is safe!
You referring to the resturant mafia group? Ooops lol
Not just food, eh?
Restaurants are an interesting topic. I wonder how many here are really profitable and how many are just, well, (whisper it) money laundering outfits. Look at all those empty seats, all those staff members, all that rent. And look at the lifestyles of some of the more prominent restaurant owners! You can’t tell me they earn all that money from their restaurant.
Totally agree. All the AML laws and no enforcement. I would love to do an AML audit on some of the restaurants.
7:26 start auditing in EE
3 restaurants in EE need checking on
But fronting is a crime. It is money laundering and fraud. We have robust agencies to identify, investigate and prosecute it. Any lawyer helping set up or maintain such a scheme would be disbarred. Anyone granted status who participates in such a scheme would have their status revoked, and be liable to deportation. We have no fronting here. The fact that there has never been a prosecution proves it.
Where I see the LOL button when we need it most?
Wait fresh…deckers or mizu or waterfront
All owned by same group of people… with a common Cayman connection…. it’s not rocket science. People just don’t want to stir the pot.so business as usual.
Good spin dat na Joey!
Joey Who?
Yea ,while the big new plane gone New York yesterday with most seats empty .