RE: The problem is the employment certificate limits. The stopgap


for people is to stay in Cayman for a longer period of time. Now we have this cycle every seven years, but by the same token, because of the job situation worldwide, people do tend to stick on for seven years and then leave. So we have some benefit but on the other end there is an end cut which is the seven-year mark.


PS: Are there internal pressures that the industry should be addressing? JA: I think that our industry is in an evolutionary stage; as a firm we’re


also evolving constantly, evolving our process, we’re learning from all the parties around the fund that we deal with; what their concerns are, what the emerging trends are and trying to feed that into the governance process and ensuring we receive information to allow us to monitor these issues. We’re evolving towards a more robust reporting process that clearly evidences our directors are discharging their fiduciary duties on a regular basis. Whether that is through the formal process of quarterly board meetings or more regularly through less conversations, emails and physical visits with service providers and managers. I think the proactive, engaged model is becoming more commonplace than perhaps was the case historically.


GR: There are certainly themes out there stemming from the crisis


as well as Weavering. For example, capacity which we discussed previously, is topical more now than ever. Different forms of governance are also very topical. The trend is to be moving towards quarterly meetings which is considered to be best practice. That being said, I really think it depends on the fund, the strategy, and ultimately on the underlying investors at the end of the day, etc—there are so many factors to take into consideration when you say ‘best practice’ because ‘best practice’ is not summed up in one sentence, let’s put it that way. So whether quarterly meetings or face-to-face meetings make sense, I don’t know or believe that there is a one-size-fits-all answer. Arguably you could say it’s not the case in many instances as it could simply be a burden in terms of time and cost.


The point being is that I believe good governance is about substance


over form—as long as there’s good substance the form is less relevant. I think once you illustrate to investors that there’s been a thoughtful, measured, and substantive approach in terms of fulfilling your fiduciary duties that they’re happy.


JA: I think it’s an important point that there isn’t an appropriate


structure we can lay across every product; there are many different products and the industry is so innovative that we will need to continue to evolve our processes to adapt to that innovation.


TB: I agree to some extent. I accept that substance over form is very


important. I also think there is in fact a legitimacy issue. If this has to get looked at in hindsight, particularly if it’s getting looked at by a court in hindsight, directors need to ask “how am I going to look here?”.


Some practices in the past, whether they did work or didn’t work,


would be irrelevant in terms of that examination and there are certain things we are no longer seeing—for example, involvement early on in the piece is seen as crucial now—it’s fair to say that sometimes in the past the directors were just sent the final copy of the package and you don’t see that any more because that looks bad in hindsight. I think that the practice of approving in retrospect looks bad in the courtroom, and I think that people are looking to avoid that kind of thing.


Not because it necessarily added value, but certainly because if you’re


going to get examined in hindsight in the courtroom, it’s just not going to be easily justified, and more importantly it is really open to criticism.


JS: There’s no question that there are certain expectations that don’t


necessarily equate to governance specifically. GR: But you have to manage expectations and that’s part of


managing clients. If perception is that it’s good governance to have four meetings, then wait a second—let’s take Weavering for example—didn’t they have quarterly board meetings? Was that good governance? It’s a perfect example of the form not necessarily being indicative of the substance.


10 CAYMAN FUNDS | 2013 Glen Trenouth, Jeff Short and John Ackerley (from left) TB: I agree but I think that in the hands of the skilled litigator in a


courtroom, if you didn’t have board meetings, if you were approving things after the event, if you didn’t look at documents you’re going to get severely criticised.


What’s ahead? PS: Thinking about opportunities for funds and trends, and looking forward, what does the future look like for Cayman funds?


GR: I will stick to the governance themes. What we’re seeing is


people are getting a little bit more interested about what’s going on— investors seem to care more now. We’re seeing a mirroring trend between on and offshore funds, whether it’s an advisory committee or a control board, some of the powers that rest with the directors on the offshore vehicles are being put into place on the onshore side of things as well. So we’re seeing a trend towards increased oversight on the onshore as well as consistency between the on and offshore vehicles. The bar is being raised. It’s a good thing.


RE: From the perspective of the type of structures, we are seeing a


marked interest in those that include arrangements similar to managed accounts, because they allow investors control as to where their funds are specifically being invested. It also gives the investor flexibility to deploy smaller amounts of capital and still enjoy greater diversification which they would not have been able to do on their own.


MW: I’m optimistic about future of Cayman. One of the things we


talked about earlier was recruitment. As we’ve been growing, I’ve been doing a lot of recruitment for our office and have really strong resumes coming in. But more importantly we are retaining our quality staff and I think that makes a big impact in terms of our client service and bodes well for Cayman’s future.


PS: In five years’ time a lot might depend on the law of unintended consequences—how much of an impact are some of the things we’ve talked about actually going to have?


TB: I think personally that a lot of where we will be in five years will


be determined by what we do now in Cayman and not what happens externally. Cayman itself can do the most in favour but also do the most damage to the industry. We’re at a point now where there is a massive amount of talk and legislation, and potential legislation coming in. I think those will either enhance or damage us, much more than anything in the outside world.


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