Following public consultation during 2016 and early 2017, legislation has been passed which will require Cayman Islands companies (but not partnerships) to maintain registers of beneficial ownership at their registered offices. The Cayman Islands Ministry for Financial Services (or its designate), as the Cayman Islands competent authority (the "Competent Authority"), will establish a non-public platform which will allow it to search information on a company's beneficial ownership provided by the company's corporate services provider upon the request of specified Cayman Islands or UK law enforcement authorities.
What do companies need to do?
Unless falling within one of the exemptions discussed below, a company must take "reasonable steps" to identify individual "beneficial owners" or "relevant legal entities". For these purposes, a company must give notice to anyone it knows or has reasonable cause to believe is a "beneficial owner" or "relevant legal entity" in relation to it and may also give notice to a person it believes knows the identity of such a person. The notice shall require the persons to whom it is addressed to confirm within one month whether or not they are registrable persons. For the purposes of identifying "beneficial owners" and "relevant legal entities", a company is entitled to rely on the response of a person to such a notice, unless the company has reason to believe that the response is misleading or false. There is no requirement to disclose information protected by legal professional privilege or where disclosure is prohibited by law.
An individual is a beneficial owner of a company if the individual holds, directly or indirectly, more than 25% of the shares or voting rights in the company or the right to appoint or remove a majority of the board of directors of the company. If no individual meets these conditions then the law looks to persons who directly or indirectly exercise significant influence or control over the company through direct or indirect ownership or interests, unless such control is solely in the capacity of a director, professional advisor or professional manager.
The company must provide the required particulars of beneficial owners and certain relevant legal entities in respect of a company to its corporate services provider with instructions to enter the required particulars in the company's beneficial ownership register (or, if none are identified, enter a nil return). In line with practice, this information is most likely already held by corporate services providers in the Cayman Islands pursuant to anti-money laundering laws.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
