Non-Profits Will Avoid Company Fees under New Law
Published 6th July 2017, 9:22am
As of Tuesday, 1 August, businesses that operate as charities can be categorised as non-profit organisations (NPOs), which will allow them to avoid substantial fees.
The new Non-Profit Organisation Law, 2016, also forms part of Cayman's preparations for the December 2017 evaluation of our regime to counter money laundering and terrorist financing.
'Once commenced, it will provide several benefits to our community', said Financial Services Minister Tara Rivers. 'It will give the public access to information on all non-profit organisations (NPOs); help them to easily identify entities registered as NPOs; and facilitate law enforcement investigations and enforcement where necessary'.
Central to the law is the establishment of an NPO register. Organisations are required to register if they meet the definition of an NPO under The Non-profit Organisations Law. This requirement includes companies that currently fall under section 80 of The Companies Law (2016 Revision). Once registered, a section 80 company will no longer be subject to the conditions imposed by Cabinet under section 80 registration, including registration costs and approval of change costs.
Businesses that are not currently designated under section 80 can qualify for the NPO register if they meet the new law's criteria.
An NPO is defined as a company or body of persons, whether incorporated or unincorporated, or a trust, that is:
- established, or which identifies itself, as established primarily for the promotion of charitable, philanthropic, religious, cultural, educational, social or fraternal objectives, or other activities or programmes for the public benefit or a section of the public within the Islands or elsewhere; and
- which solicits contributions from the public or a section of the public within the Islands or elsewhere.
In addition to allowing charities to save registration costs, the NPO provisions are intended to meet Financial Action Task Force Recommendations. These require countries to protect against terrorist financing by knowing the NPOs that are operating in the country, and by monitoring the NPOs that represent the largest portion of the industry.
The Financial Action Task Force (FATF) is an inter-governmental body that sets standards and promotes effective implementation of legal, regulatory and operational measures for combatting money laundering, terrorist financing and other related threats to the integrity of the international financial system. Cayman is a member of the Caribbean Financial Action Task Force (CFATF), an FATF-styled regional body that is committed to implementing the FATF Recommendations.
Because of its 1 August commencement date, local NPO legislation will be in place ahead of the CFATF's December 2017 evaluation of Cayman's anti money-laundering and counter-financing of terrorism regime. The CFATF calls the assessment the 'Mutual Evaluation Process', to reflect the fact that it will be conducted by assessors chosen from CFATF member countries.
Compared with the section 80 process, NPO registrations will be streamlined. For example, registrations are required to occur within a maximum of 30 days, rather than the current, extensive timeframe for section 80 approvals; and changes will be filed by notice to the designated registrar, rather than by the current Cabinet approval process for section 80 companies.
For more information, please contact the Financial Services Secretariat at (345) 945-5819 or via email at email@example.com.