Institutional investors demand robust governance to ensure their capital is protected from manager conflicts of interest. In Cayman, this is achieved via Independent Directors.
The Weavering Case
The landmark Weavering Macro Fixed Income Fund judgment cemented the standard for fund governance in Cayman. The court ruled that "jumbo" or "token" directors who blindly signed off on manager decisions without interrogating the NAV or audit processes were in breach of their duties.
What constitutes Independence?
An independent director must have no familial, financial, or executive ties to the investment manager. They act as a check and balance, particularly during conflict-heavy scenarios like:
- Approving a suspension of NAV or redemptions.
- Approving affiliated cross-trades.
- Valuing illiquid Level 3 assets.
Director Registration
Under the Directors Registration and Licensing Act (DRLA), any individual acting as a director of a CIMA-registered fund must be registered with CIMA. Professional directors acting for 20 or more funds must be fully licensed.
Check Director Capacity Limits