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If the parties to an agreement governed by Cayman Islands law would like the agreement to take effect from a date earlier than the date upon which the agreement is signed and entered into, the parties should expressly state in the document that it is intended to be effective from a date earlier than the date on which the parties entered into the agreement. It should be made clear in the document that notwithstanding it being entered into on the date of execution by the parties, it is to take effect from an earlier date.

Stating that the agreement will be effective from an earlier date will, however, only be effective, as a matter of Cayman Islands law, as between or among the parties to the agreement. It will not affect those parties’ obligations under the terms of the agreement with regard to third parties who are not parties to the agreement. The obligations to third parties will almost invariably be based on the date that the agreement was fully executed, subject to any applicable special circumstances.

Whilst parties signing a Cayman Islands law governed agreement may expressly state that the agreement is effective from an earlier date, the parties should not “back-date” the date of execution (for example, by signing the agreement today but dating it with an earlier date, thereby making the document seem as if it was also signed on some earlier date). The document should be dated with the date on which it is signed and entered into. Back-dating agreements has a number risks for the parties thereto, including the risk of civil and/or criminal sanctions being brought by, for example, tax authorities and regulatory authorities in jurisdictions where the document is required to be filed or produced. Depending on, among other things, the nature and subject matter of the agreement, the parties risk facing claims of false accounting or false statements by directors, or even conspiracy to defraud, if they “back-date” the agreement in order to give the impression that the agreement was entered into on some earlier date.