Cayman government’s plan for a centralized register of companies’ beneficial ownership information has been implemented.On April 7, 2017, the Cayman’s Legislative Assembly approved the regulations requiring companies and limited liability companies (“L.L.C.’s”) to create and maintain beneficial ownership registers.2 The registry is not open to the public and is only accessible by the approved Cayman Islands authority, mainly on lawful request by U.K. law enforcement agencies.
The following companies fall within the scope of the regime (“In-Scope Entities”):
- Companies incorporated or registered by way of continuation under the Companies Law (2016 Revision), including ordinary resident and non-resident companies, special economic zone companies, and exempted companies (including exempted limited duration companies and segregated portfolio companies)
A number of exemptions exists (e.g., publicly traded companies and registered founds). If no exemption applies, companies must take “reasonable steps” to identify
- whether any individual is a qualifying “beneficial owner” (as described below) of that In-Scope Entity, and
- whether any legal entities that are registered in the Cayman Islands (including as a “foreign company”) would meet the definition of a beneficial owner in relation to that In-Scope Entity if they were an individual rather than a legal entity (a “relevant legal entity”).
This obligation may require an In-Scope Entity to correspond with, and give formal notices to, persons whom it knows, or has reasonable cause to believe, are relevant legal entities or would be if registered in the Cayman Islands. Persons who receive such notice must respond within one month of receipt, as it is a criminal offence to fail to do so.
According to the regulations, a beneficial owner is an individual who meets one of the following conditions:
The individual holds, directly or indirectly, more than 25% of the shares in company.
- The individual holds, directly or indirectly, more than 25% of the voting rights in company.
- The individual holds the right, directly or indirectly, to appoint or remove a majority of the board of directors.
If no individual meets the foregoing conditions, an individual, trust, partnership, or other non-legal person may be classified as a beneficial owner if it has the absolute and unconditional legal right to exercise, or actually exercises, significant influence or control over the company or L.L.C. through an ownership structure or interest described above, other than solely in the capacity of a director, professional advisor, or professional manager.
Otherwise, if no individual satisfies any of the conditions above, but the trustees of a trust or the members of another legal vehicle that is not a legal person (such as a general partnership) satisfy one of the conditions set out above in relation to an In-Scope Entity in their capacity as trustees or members, then such persons will be beneficial owners for the purposes of the beneficial ownership regime if such persons have the absolute and unconditional legal right to exercise, or actually exercise, significant influence or control over the activities of that trust or other vehicle, other than solely in the capacity of a director (or manager), professional advisor, or professional manager.
At present, no official deadline has been published, but the government had previously indicated that In-Scope Entities must establish registers no later than June , 2017.
1 McManus v. United States (2017 BL 66227, Fed. Cl., No. 1:15-cv-00946, March 3, 2017).
2 The Cabinet, The Beneficial Ownership (Limited Liability Companies) Regulations, 2017