Directors of captives under the microscope
The panel discussion “Director Responsibilities – A 360 Review” at the Cayman Captive Forum 2025 offered delegates a rare full-circle view of what it truly means to serve as a director in the Cayman Islands. Featuring insights from Lesley Thompson (WTW), Melissa Thomas (Aurum Governance), Hon. Justice Jalil Asif KC (Grand Court of the Cayman Islands) and Helen Spiegel (CIMA), the session explored director duties from the perspectives of industry, independent governance, regulation and the judiciary.
Thompson opened the session by noting that while many delegates may already hold board positions, the seriousness of the role is often underestimated. The panel aimed to demystify directors’ obligations, including what happens when things go wrong.
Speaking on behalf of the Cayman Islands Monetary Authority (CIMA), acting deputy general counsel Helen Spiegel outlined the centrality of the fitness and propriety (F&P) test. Applied during licensing, director registration and enforcement assessments, the test focuses on three pillars: honesty and integrity, competence and capability, and financial soundness. She stressed that experience in one area—for example, investment funds—does not automatically qualify an individual to serve as a director of a captive insurer.
A key theme was the importance of accurate, up-to-date Personal Questionnaires (PQs). Spiegel emphasised that discrepancies between a PQ and independent background checks may be interpreted as dishonesty. Directors must therefore err on the side of over-disclosure and update CIMA whenever circumstances change, even if those changes seem minor.
Spiegel also highlighted findings from CIMA’s 2024 thematic corporate governance review, which identified common weaknesses across boards. These included inadequate time commitments by non-executive directors, insufficient evidence of policy reviews, weak succession planning and overly informal board meetings with inadequate minutes.
Proportionality remains important, particularly for captives, she noted, but minute-taking is not optional; minutes often serve as a director’s “first line of defence”.
Balancing its supervisory role with industry partnership, CIMA collaborates with the private sector on initiatives such as the national risk assessment and upcoming CFATF mutual evaluation. But when needed, it can impose administrative fines—up to CI$1 million for very serious breaches by corporate bodies—and take further enforcement action, ranging from licence conditions to revocation.
Again, accurate minutes can be crucial: they help establish whether a breach was due to a director’s neglect or whether the individual acted properly.
Hon. Justice Jalil Asif KC provided a judicial perspective on director duties. Although he cautioned that he was speaking in a personal capacity, he outlined the two main contexts in which directors encounter the courts: regulatory appeals and liability claims alleging breach of duty.
Most claims against directors centre on breach of fiduciary duty, particularly failures to act in the best interests of the company or situations involving conflicts of interest. Directors’ duties are owed to the company as a whole—not individual shareholders—and may shift towards creditors (including policyholders) when solvency becomes uncertain.
Asif explained that Cayman law has deliberately remained grounded in common law, rather than codifying duties as in the UK Companies Act 2006. This gives judges flexibility but places greater emphasis on evidence.
In a striking reminder of how courts assess factual disputes, he cited the English case Gestmin (2013), in which the judge warned against over-reliance on human recollection. Memory is “malleable”, he noted; therefore, contemporaneous documentation carries far more weight than oral testimony. Comprehensive minutes and well-prepared board packs are critical.
Lesley Thompson spoke candidly about the complex web of roles many directors juggle—industry professional, manager, shareholder representative and board member. To reinforce clarity around “which hat” each participant is wearing in discussions, she has even used colour-coded caps during meetings. The aim is simple: directors must consciously separate organisational roles from board duties.
She also warned against the pressures that can arise from senior management or shareholders, reminding the audience that all directors have equal standing in law. Dissent is acceptable—what matters is that concerns are voiced and documented.
Thompson shared a defining personal experience from an early-career catastrophe bond transaction where, after Hurricane Katrina, investors sued the directors. Painstaking documentation ultimately protected them. Her lesson: every action must be defensible in a court of law, even if it makes one appear difficult at times.
Independent director Melissa Thomas described independence as the ability to provide impartial, conflict-free judgement in the best interests of the company and all stakeholders. While captives often have inherently conflicted boards, independence—whether structural or behavioural—ensures decisions are objective, especially for related-party matters. Even where formal independence is not required, every director must exercise an independent mind.
The panel’s unified message was clear: being a director is a serious professional commitment requiring integrity, diligence, documentation, and constant awareness of one’s duties. Whether viewed through a regulatory, judicial, or industry lens, the fundamentals remain the same—prepare well, act responsibly, document thoroughly, and always prioritise the company’s best interests.
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