Building Societies

Summary

Incorporated bodies in the Cayman Islands formed for the purpose of raising funds through member shares to provide mortgage-backed advances to members.

Sources

[[Building_Societies_Act_(2020_Revision).pdf]]

Last Updated

2026-04-27

Definition and Purpose

A Building Society is a specialized financial institution governed by the building-societies-act-2020. Its primary function is to raise a fund by subscriptions of members to make advances to members upon security of freehold property (mortgages) or on the security of their uncharged shares (source: Building_Societies_Act_(2020_Revision).pdf, Sections 3, 16, 17).

Regulatory Supervision

Building societies are regulated by the Cayman Islands Monetary Authority (cima). Key regulatory aspects include:

Fitness and Propriety

All directors and senior officers must be determined by CIMA to be fit and proper persons. CIMA assesses their honesty, integrity, reputation, competence, capability, and financial soundness (source: Building_Societies_Act_(2020_Revision).pdf, Section 3(1E)).

Financial Restrictions

Interest Rates: Loans to members cannot exceed an interest rate of 12.5% per annum (source: Building_Societies_Act_(2020_Revision).pdf, Section 5(1)(a)).
Borrowing Limit: A society's total borrowing (deposits and loans) cannot exceed 75% of the amount secured to the society by member mortgages (source: Building_Societies_Act_(2020_Revision).pdf, Section 19(b)).
Share-backed Advances: Advances made solely on the security of uncharged shares are limited to 80% of the amount actually paid in on those shares (source: Building_Societies_Act_(2020_Revision).pdf, Section 17).

Mandatory Auditing

Societies must undergo annual audits. Auditors have a statutory duty to report to CIMA if they suspect insolvency, criminal activity, or breaches of the monetary-authority-act-2020 or anti-money-laundering-regulations-2025 (source: Building_Societies_Act_(2020_Revision).pdf, Section 22A).

Fees and Costs