Applicability
The Government of the Cayman Islands enacted the Beneficial Ownership (Amendment) Act, introducing a significant update to the regulatory framework for reporting beneficial ownership. This new legislation replaces and expands upon the original Beneficial Ownership (Companies) Act, 2017, which was introduced to improve transparency and compliance with international standards for combating money laundering (AML) and counter-terrorist financing (CTF).
The Beneficial Ownership Regime broadens the scope of the original regulation, which primarily applied to companies and limited liability companies (LLCs and LLPs). Under the new Act, the definition of a legal person now encompasses exempted limited partnerships, foundation companies, and other entities as prescribed by law.
Beneficial owner and reportable legal entity
Under the new regime, a beneficial owner is defined as any individual who either holds more than 25% of the shares or voting rights in the entity, exercises ultimate control over its management, or is identified as having significant control through other means.
The regime also includes “reportable legal entity” which refers to a legal entity (such as a company, partnership, or trust) that could qualify as a beneficial owner of another legal entity, based on the same criteria used to identify a beneficial owner if the reportable legal entity were an individual. For example: A company can be considered a beneficial owner of another legal entity if it holds significant control or ownership over it.
Beneficial Ownership Register
All legal persons subject to the Act are required to maintain accurate and detailed records regarding their beneficial owners. This includes identifying, providing, and maintaining the appropriate information related to these individuals or outlining any alternative compliance routes taken by the legal person.
Notably, any changes in beneficial ownership must be promptly updated in the Beneficial Ownership Register within 30 days of their occurrence. The Competent Authority will utilize this information to assess compliance with the Act and ensure that entities meet the beneficial ownership thresholds.
Required Information
To comply with the Beneficial Ownership Regime, entities must gather specific information regarding both beneficial owners and reportable legal entities as follows:
| Beneficial Ownership Register |
|---|
| Existing Requirements | Additional Requirements (as per the Amendment) |
|---|---|
– Full legal name – Residential address – Date of birth – Identification number. Must include Country of issue, dates of issue and expiry (must be government issued document. | – Details of ownership or control (e.g., percentage of shares or voting rights held). – Nationalities (must include all nationalities) |
| Reportable legal entities |
|---|
| Existing Requirements | Additional Requirements (as per the Amendment) |
|---|---|
– Corporate/firm name; – Registered or principal office; – Legal form and governing law; – Dates when the Reportable legal entity was established as a registrable beneficial owner and when it ceased to be one, in relation to the legal person in question. | – How the reportable legal entity owns or exercises control of the legal person; – The register in which it is entered and its registration number in that register. |
Penalties and Sanctions
Non-compliance with the beneficial ownership reporting obligations can lead to administrative penalties of up to CI$25,000 (approx. USD$30,000.00), payable within 30 days. Additionally, failure to comply for each day the offense continues may incur an extra fine of CI$500 (approx. USD$600.00), per day.
Exemptions
Certain entities are exempt from the requirement to maintain a Beneficial Ownership Register, such as those listed on recognized stock exchanges or licensed and regulated under financial services legislation in the Cayman Islands. However, exempt entities must still file a declaration of exemption with their Registered Agent. This filing must include written confirmation of their exemption category and the relevant particulars, as outlined below:
| Category of legal person | Particulars |
|---|---|
A legal person listed on the Cayman Islands Stock Exchange or an approved stock exchange or a subsidiary of such listed entity. | – Name of stock exchange – Jurisdiction of stock exchange – If applicable, details of relationship to the listed entity. |
A legal person licensed under a regulatory law | Details of the regulatory law |
An investment fund registered with CIMA under the Mutual Funds Act (as amended) or the Private Funds Act (as amended) | Appointment of a Contact Person |
The Cayman Islands remains committed to aligning with international standards, aiming to enhance transparency in ownership structures through its updated Beneficial Ownership Regime. For further information about the requirements, you may refer to the Beneficial Ownership Transparency Act and the accompanying Guidance on Complying with Beneficial Ownership.
Should you have any inquiries regarding beneficial ownership in the Cayman Islands, or need assistance with filing requirements, please do not hesitate to contact our team at [email protected].
