CAYMAN NATIONAL ISLE OF MAN
CONFLICTS OF INTERESTS POLICY

1. Introduction

It is important to identify and manage conflicts of interest which arise or may arise in the course of providing a service, as their existence may lead to a material risk of damage to a client’s interests.

This document sets out the policy of those companies within the Cayman National (Isle of Man) group of companies (referred to hereafter collectively as “Cayman National”) and associated entities to effectively manage the conflicts of interest that may arise where those companies provide services to clients in the course of carrying on regulated activities.

This document is prepared and published in order to comply with our local rules and regulations and is not intended to create third party rights or duties or form part of any contractual agreement between any company within Cayman National and any client. This policy may be amended at any time if a material change occurs and will be reviewed on an annual basis.

This document is prepared and published in order to comply with our local rules and regulations and is not intended to create third party rights or duties or form part of any contractual agreement between any company within Cayman National and any client. This policy may be amended at any time if a material change occurs and will be reviewed on an annual basis.

2. Cayman National Group

The companies within Cayman National are all subsidiary companies (either directly or indirectly) of the Group, based in the Cayman Islands. The Group is able to demonstrate that it has appropriate and effective arrangements in place to ensure that, where appropriate, businesses within the Group operate independently of each other and will therefore not be deemed  to have knowledge of each other for conflicts of interest purposes.

 The companies within Cayman National currently comprise:

  • Cayman National Bank & Trust Company (Isle of Man) Limited
  • CN Director Limited
  • Cayman National Nominees Limited
  • Cayman National Secretarial Limited
  • Beeston Management Limited
  • CNB Nominees Limited

3. General Statement

In order to achieve and demonstrate long term success in its objectives, Cayman National asserts that its clients’ interests will always take priority during the development of a suitable proposition but acknowledges that a range of other risk based and commercial factors will be assessed before implementing a final solution. The appropriateness of products and services offered by Cayman National will continue to be actively monitored.

It is important to identify and manage conflicts of interest which arise or may arise in the course of providing a service, as their existence may lead to a material risk of damage to a client’s interests.

4. Cayman National Group

The Group is able to demonstrate that it has appropriate and effective arrangements in place to ensure that, where appropriate, businesses within the Group operate independently of each other and will therefore not be deemed to have knowledge of each other for conflicts of interest purposes.

5. Suppliers and Outsourced Services

Cayman National or any associate or any party to whom it may have delegated its functions or to whom it relies upon to deliver core services (a “Supplier”), may without prior reference to a client, effect transactions in which Cayman National or the Supplier has, directly or indirectly, a material interest or a relationship of any description with another party, which may involve a potential conflict with Cayman National’s duty to the client.

 There may be a potential conflict of interest in relation to the access of any such Supplier to certain information. This is mitigated by the contractual relationship between Cayman National and the outsource supplier and also by rules and regulations including data protection.

 In the event of any such transaction, however, Cayman National will ensure that: ‑

  • such transactions are effected on normal commercial terms negotiated at arms length and on terms which are not materially less favourable to the client than if the potential conflict had not existed;
  • such transactions do not adversely affect the performance of Cayman National’s duties and responsibilities to the client; and
  • it takes reasonable steps to ensure fair treatment for the client in accordance with local rules and regulations.

6.Disclosure and Types of Conflict

Cayman National will clearly disclose the general nature and source of a conflict of interest, if such has been identified, to the client before undertaking business for the client. The disclosure will be made in writing and include sufficient detail to enable the client to make an informed decision about the service, in the context of which the conflict of interest is believed to have arisen.

 The following disclosure is made in compliance with that policy and notes some of the general types of potential conflicts of interests or duties which may arise in the companies within Cayman National because:

  • a Director or Employee of Cayman National or an associate of Cayman National, is a director of, holds or deals in securities of, or is otherwise interested in any company whose securities are held or dealt in on behalf of a client;
  • a transaction is effected in securities/ foreign exchange in respect of which Cayman National or an associate may benefit from a commission, fee, mark up or mark down payable otherwise than by a client, and/or Cayman National or an associate may also be remunerated by the counterparty to any such transaction;
  • Cayman National deals on behalf of a client with, or in the securities of, an associate;
  • Cayman National may act as agent for a client in relation to transactions in which it is also acting as agent for the account of other clients and/or associates; and
  • a transaction is effected in units or shares of funds, or of any company of which Cayman National or an associate is the manager, operator, administrator, banker, adviser, custodian or trustee.

The circumstances giving rise to conflicts of interest includes all cases where there is:

  • conflict between the interests of Cayman National, a Director or Employee, certain persons directly or indirectly connected to Cayman National and the duty that Cayman National owes to a client;
  • conflict between the differing interests of two or more clients, as Cayman National owes a separate duty to each of them; or
  • conflicts between Cayman National (or its Directors or Employees) and suppliers or goods or services to Cayman National.

Conflicts may arise and all Directors and Employees must take into account whether any of the parties described above:

  • is likely to make a financial gain, or avoid a financial loss, at the expense of the client;
  • has an interest in the outcome of a service provided to the client, or of a transaction carried out on behalf of the client, which is distinct from the client’s interest in that outcome;
  • has a financial or other incentive to favour the interest(s) of another client or group of clients over the interests of the client;
  • carries on the same business as the client; or
  • receives or will receive from a person other than the client an inducement in relation to a service provided to the client, in the form of monies, goods or services, other than the standard commission or fee for that service.

Specific potential conflicts of interest may arise within each firm within Cayman National relating to clients, personal account dealing and certain private conflicts of interest. Each of these is explained in more detail below.

Examples of such conflicts or potential conflicts:

  • Potential conflict as a director/trustee on behalf of client, where Cayman National or another company within the Cayman National Group is appointed as investment managers/bankers/custodians.  There needs to be clear procedures that the appropriate research has been conducted.  Regular reviews need to be carried out to demonstrate that an impartial approach has been taken.
  • Senior Employees need to be aware of potential conflicts where they are appointed in their personal (employed) capacity as trustee/director for multiple client entities and the potential conflict between their obligations as an Employee of Cayman National and their duties as a director of an administered entity.
  • Directors or Employees may be privy to price sensitive information, particularly related to investment matters and must not use it for personal gain.
  • The Managing Director and Banking Director, as lending approval officers, must be aware that any facility for a family member/friend or member of his/her direct report staff could give rise to a potential conflict of interest when following the approval process.
  • There is a potential conflict if a Director or Employee had an interest in the outcome of a service provided to the client or of a transaction carried out on behalf of a client, which is distinct from the client’s interest in that outcome. However, this is mitigated by the fact that Directors and Employees are not commission based, but are performance assessed.
  • When a Director or Employee sits on an external board where Cayman National administer the fund or provide custodian services, they have a fiduciary duty to the fund to act in its best interests which may conflict with their obligations as a Director or Employee.
  • All directors of Cayman National companies are required to declare if they have external directorships. If those external interests contract with or provide services to Cayman National this may cause a conflict. A register is maintained of this information and this should be regularly reviewed.
  • There would be a conflict if the Director or Employee were to receive an inducement in relation to a service provided to the client, in the form of monies, goods or services.
  • The Director or Employee has a financial or other incentive to favour the interests of another client or group of clients over the interests of the client.
  • The Director or Employee has a financial or other incentive when placing orders with suppliers for goods or services to be supplied to Cayman National.

7. Managing Conflicts of Interest

It may not be possible to prevent actual conflicts of interest from arising. In that case, Cayman National will seek to manage the conflict of interests by:

  • establishing an information barrier (Chinese wall);
  • segregation of duties;
  • independent oversight;
  • disclosure to the client;
  • declining to provide the service; or
  • establishing and maintaining an appropriate register of Employee's interests.

If any Director or Employee believes their independence is compromised, they must not continue in their duties until the situation has been discussed with the Compliance Manager.

8. Reporting Conflicts of Interest

Conflicts of interest situations or potential conflicts situations should be reported immediately to the head of the relevant business unit and to the Compliance Manager

9. Chinese Walls

A “Chinese Wall” is a system designed to restrict the flow of information between parts of a firm, or group of companies, performing potentially conflicting functions. The principle is that, in general, those within one Chinese Wall should have no knowledge of confidential transactions taking place within another Chinese Wall and are therefore wholly unaware of, and are able properly to operate without regard to, a conflicting interest outside their Chinese Wall.

The operation of a Chinese Wall may involve a range of practices including the segregation of data and computer systems, as well as physical separation of certain businesses so they are unable to access the same part of the office. The operation of Chinese Walls will be established at Board level and enforced by the Compliance Department.

10. Segregation of Duties

There are a number of distinct tasks within Cayman National that potentially could lead to conflicts of interest.  In the main, these are mitigated by them being subject to segregation (for example in terms of input and acceptance of instructions) and/or by dual/multiple sign-off of a particular transaction.

11. Independent Oversight

The organisation structure of each company within Cayman National ensures that Employees involved in day‑to‑day activities are subject to appropriate management and supervision. Thus, Cayman National is able to demonstrate that it has appropriate and effective arrangements in place to ensure that conflicts of interest are properly managed.

In addition, Cayman National has a Compliance Manager who is responsible for ensuring that control structures and procedures across Cayman National are compliant with relevant laws, regulations, codes of practices relating to the various business activities, initiating appropriate standards and policies and also applying consistency, where appropriate with Cayman National Group standards and policies.

12. Disclosing to the Client

Where a conflict or a potential conflict arises this will be disclosed to the client as appropriate.

13. Declining to Provide the Service

If it is not possible to avoid or manage a conflict of interest, Cayman National may have no choice but to decline to provide the service requested.

14. Register

A Conflict of Interest Register will be maintained and regularly reviewed to ensure that it accurately reflects the relevant information. It will also be tabled for discussion at Board meetings of the individual constituent companies of Cayman National regularly, but no less than on an annual basis. The Register will be maintained and held by the Compliance Manager.

Details of the conflict of interest must be kept on the Register for at least 6 years after the date the conflict is deemed to have ceased.

15. Private Conflicts of Interest

Directors and Employees are always alert to possible private conflicts of interest between their personal affairs and their obligations to Cayman National as their employer and the clients of Cayman National. Even the appearance of a conflict between personal gain and the interests of Cayman National or clients can erode the trust and confidence on which Cayman National’s reputation rests. Accordingly, no Employee may act in any transaction involving persons or organisations with which they or their family have any significant connection or financial interest.

Without the permission of the Managing Director, Employees are not permitted to:

  • hold office with any entity other than Cayman National companies or Cayman National managed entities;
  • be engaged directly or indirectly in any business other than that of Cayman National.

[document refreshed August 2016]