Statement of Guidance - Succession Planning (March 2019)

Summary

This is a CIMA Statement of Guidance (SOG), effective March 2019, setting out the Authority's minimum expectations for succession planning by regulated entities. It explains why succession planning matters - to ensure continuity of ownership, leadership and key control functions in the event a shareholder, director, senior manager or person in a controlled function becomes incapacitated, dies, or is otherwise absent for a significant period. The guidance is non-prescriptive: it does not amend existing law, and where it is inconsistent with law, the law prevails.

• Applicability: The guidance applies to CIMA licensees across several sectors: banks and trust companies, company managers and corporate service providers, insurance entities, mutual fund administrators, securities investment businesses, and money services businesses.
• Special emphasis: It is especially emphasized for licensees with two or fewer shareholders and/or only the statutory minimum of two directors.

Licensees are expected to have a documented succession plan covering the following elements.

• Ownership transfer: The plan should address how ownership will be transferred.
• Replacement of personnel: It should address replacement of directors and key controlled-function personnel.
• Training: It should provide for training of successors.
• Communications plan: It should include a communications plan for informing stakeholders and the Authority.

The plan should be kept in English (or be translatable), reviewed and updated periodically, and made available to the Authority on request. Licensees must also notify CIMA immediately if a sole shareholder, one of only two shareholders, or a director becomes incapacitated or is expected to be absent for a significant period. Any new shareholders or directors identified in the plan will still require CIMA's fit-and-proper approval.

Key obligations

• Licensees should formulate and maintain a documented succession plan addressing continuity of ownership, directors, senior management and persons in controlled functions in the event of incapacitation, death, or long-term/permanent absence.
• The succession plan must be documented in English or be capable of being translated into English within a reasonable timeframe.
• Licensees must keep the succession plan readily available for access by the Authority in line with CIMA's recordkeeping requirements, and produce it on request (including as part of the licensing process or at any time).
• Each licensee should periodically review its succession plan and update it as necessary to reflect changes in business, law, or personal circumstances of relevant persons.
• Licensees must ensure that any persons proposed in the succession plan who require Authority approval (e.g., new shareholders or directors) are fit and proper, as unapproved persons cannot assume the role.
• A licensee must immediately contact the Authority if one of two shareholders, a sole shareholder, or a director becomes incapacitated or suffers an event expected to result in a significant period of absence.
• The succession plan should include a communications plan detailing how shareholders, directors, senior managers, employees, service providers and controlled-function personnel will be informed of role/ownership transfers, and how the Authority will be informed and approvals sought.
• Licensees should be prepared to demonstrate to the Authority, if requested, the adequacy of their succession plan.

Applies to

Banks and trust companies licensed under the Banks and Trust Companies Law, Company managers and corporate services providers licensed under the Companies Management Law, Insurance companies, insurance brokers, insurance agents, and insurance managers licensed under the Insurance Law, Mutual fund administrators licensed under the Mutual Funds Law, Securities investment businesses licensed under the Securities Investment Business Law, Money services businesses licensed under the Money Services Law

Deadlines

• immediately: A licensee must immediately contact the Authority upon a sole shareholder, one of two shareholders, or a director (where the licensee meets the statutory minimum of two directors) becoming incapacitated or suffering an event expected to result in a significant period of absence.