FATCA: a practical guide to CLO issuers

The US-Cayman Islands Inter-Governmental Agreement (the IGA) was signed and published on 29 November 2013, and the much anticipated exemption for CLO Issuers was regrettably not part of Annex II of the IGA. Whilst we are still awaiting the publication of the terms of the Cayman Islands domestic legislation that will implement the IGA (which we expect to be forthcoming in December 2013 or January 2014), FATCA’s implementation is now on a tight timeline, and there are steps that must be taken by each CLO Issuer and its Board of Directors in short order.

Non-compliance with FATCA by a CLO Issuer will have adverse consequences as set out in the risk factors in the Offering Memoranda of many CLOs, potentially impacting the returns on the deal. Accordingly, each CLO Issuer acting through its Board of Directors, and specifically through the newly appointed role of the FATCA Responsible Officer (the “FRO”), must take the steps prescribed in the Hire Act and in the IGA. There is no time to waste.

There is a limited period of time for CLO Issuers, in conjunction with the related Cayman Administrator, Trustee and Collateral Manager to get their houses in order…

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