The Companies (Amendment) Law, 2017, the Beneficial Ownership (Companies) Regulations, 2017, The Limited Liability Companies (Amendment) Law, 2017 and the Beneficial Ownership (Limited Liability Companies) Regulations, 2017 (all the foregoing taken together, the “Beneficial Owner Regime”) came into effect on 1 July 2017. The Beneficial Owner Regime requires certain Cayman companies to establish and maintain a beneficial ownership register setting out certain required particulars of registrable persons (as defined in the Beneficial Owner Regime). These companies are described below.
Companies Caught By The Beneficial Owner Regime
Cayman companies existing as exempted companies, ordinary non-resident companies and companies registered as special economic zone companies under the Special Economic Zones Law, 2011 and which fall within the ambit of the Beneficial Owner Regime must engage a licensed Cayman Islands corporate services provider to assist them to establish and maintain their beneficial ownership registers.
Cayman companies doing business as ordinary resident companies and which fall within the ambit of the Beneficial Owner Regime have the option of engaging a licensed Cayman Islands corporate services provider or the Registrar of Companies in the Cayman Islands to assist them to establish and maintain their beneficial ownership registers (the Registrar may charge prescribed fees for establishing and maintaining a beneficial ownership register on behalf of an ordinary resident company).
If the relevant management of a Cayman company is unclear whether the company is subject to the Beneficial Owner Regime, the company should seek the guidance of Cayman Islands legal counsel.
Steps After Obtaining Guidance
Once a Cayman company has obtained the necessary guidance from Cayman Islands legal counsel and it is determined that the company falls within the ambit of the Beneficial Owner Regime, the company must take reasonable steps to identify any individual who is a beneficial owner of the company and all relevant legal entities that exist in relation to the company (“beneficial owner” and “relevant legal entity” are defined under the Beneficial Owner Regime).
For the purpose of the foregoing and subject to the provisions of the Beneficial Owner Regime, a Cayman company that falls within the ambit of the Beneficial Owner Regime must give notice in writing to beneficial owners and relevant legal entities identified in accordance with the provisions of the Beneficial Owner Regime and to any person that it knows or has reasonable cause to believe is a registrable person in relation to it. The notice shall require the persons to whom it is addressed, within one month of the date of receipt of the notice (a) to state whether or not they are registrable persons, within the meaning of the Beneficial Owner Regime and (b) if they are registrable persons, to confirm or correct any required particulars that are included in the notice and supply any required particulars that are missing from the notice.
In the case of the confirmation of required particulars, a Cayman company is entitled to rely, without further enquiry, on the response of a person or the legal entity (as the case may be) to a notice in writing sent in good faith by the company, unless the company has reason to believe that the response is misleading or false.
Details of Required Particulars
In Part 2 of this update, a description is provided regarding the required particulars to be submitted and entered into the beneficial ownership register in accordance with the Beneficial Owner Regime. The required particulars will vary according to the person or entity for which the particulars are being confirmed to the Cayman company.
About the Author:
Alric Lindsay is a Cayman Islands corporate/funds lawyer and an independent fund director approved by the Cayman Islands Monetary Authority and licensed under The Directors’ Registration and Licensing Law. Alric also acts as voluntary liquidator to Cayman Islands entities. Alric can be contacted at email@example.com