The Cayman Islands' beneficial ownership register

Introduction

In April 2016 the Cayman Islands’ made a commitment to the UK to enhance the sharing of beneficial ownership information. As a result, the Cayman Islands government has passed legislation to introduce the requirement for an electronic register of beneficial ownership information (the “Register”) to be maintained by all Cayman companies (other than those companies excluded from this requirement under the legislation).

Who must maintain a Register?

Cayman Islands companies are required to establish and maintain a Register. They must engage their Licenced corporate services provider (such as Citco Trustees (Cayman) Limited (“Citco”)) to maintain the Register in the Cayman Islands. Examples of entities excluded from the requirement to maintain a Register include publicly listed companies, such as those listed on the Cayman Islands Stock Exchange or other approved stock exchanges, or regulated entities and those owned by them.

Where will an entity’s information be held and stored?

The information will be held and stored at the registered address of the company.

Will the Register be publicly available? 

No, the Register will not be publicly available, it may only be accessed by the designated competent authority.

How will the Register be accessed?

The Cayman government will establish a centralized electronic registration platform (the “Platform”) to facilitate the transfer of beneficial ownership information held in the Register, to the authorized competent authority.

Whose details must be entered on the register?

All beneficial owners must have their details entered on the Register. A beneficial owner may be an individual or a legal entity and is specifically defined as someone who:

  • holds directly, or indirectly, more than 25% of the shares or interests in a company with a right to share in more than 25% of the capital, and holding more than 25% of the voting rights;
  • has the right to appoint or remove a majority of the board of directors or managers of the company;
  • has the absolute and unconditional right to exercise significant influence or control over the company.

Will shareholders of a company holding shares as Joint Tenants with the Right of Survivorship, have to be entered on the Register?

Yes, provided such shareholding meets the ownership threshold, then all the joint tenants will be required to be entered on the Register.

Where the shares are owned by a trust will the settlor and/or beneficiaries be included on the Register?

In most cases, only the name of the trustee will appear on the register.

What Information is required to be stored for each beneficial owner in the Register?

For individuals:

  • Full name and residential address
  • Date of birth
  • Information identifying the beneficial owner from their passport, driver's licence or other government issued document including:
    - identifying number;
    - country of issue; and
    - the date of issue and expiry; and
    - the date on which he/she became or ceased to be a beneficial owner.

For entities:

  • Name
  • Registered office
  • Type of entity and place of incorporation
  • Registration number
  • Date it became or ceased to be a beneficial owner.

Information on the Register will remain on it for 5 years from the date the person/entity ceases to be a beneficial owner.

Who can Access the Register and on what grounds?

The information will only be available to the specified Cayman Islands competent authority via the Platform, in matters incidental to or connected to the company. Searches of the Register will only be executed by the Competent Authority at the request of designated bodies, such as the Financial Intelligence Unit or Financial Crimes Unit of the Royal Cayman Islands Police Service. The body requesting the search of the Register must certify that the request is proper, lawful and in compliance with the legislation and that it is from a country that has entered into an agreement with the Cayman Islands for the sharing of beneficial ownership information (only the UK at the moment has this agreement with Cayman, but it is expected that more countries will seek access to the Platform going forward).

What obligations does your company have?

Each company within the scope of the legislation is required to identify its beneficial owners and may need to enter into correspondence with, and give formal notices to, them. Failure by the company and/or its beneficial owners to comply with the requirements to establish and maintain the Register could result in criminal prosecution and financial penalties being imposed on the company, its managers, officers or the beneficial owners.

When will the Platform be in place?

The Platform is expected to be in place by 30 June 2017 however, there will be a transition period of one year from the date of the introducing legislation, during which time companies will not be prosecuted for failing to comply with the legal requirements. 

What are the practical implications for your company?

A company must take reasonable steps to identify its beneficial owners and ensure information is provided to its corporate services provider to enable the Register to be established.As your corporate services provider Citco maintains the details of the shareholders of the company in its systems based on the information collected and provided when the relationship was established and it may not be necessary for the company to send notices to identify its beneficial owners, unless there has been a change of beneficial ownership that has occurred of which Citco is not aware. To confirm the information held by Citco please contact us as soon as possible so that we can review the position. In any event, Citco will be reaching out to our clients individually to help to put the Register in place.

Conclusion

It is important to be aware of, and to observe, the legal requirements governing the operation of your company. This memo is only a brief summary, and is for information purposes only and is not intended to be relied upon as legal advice. Citco is happy to guide you on the requirements and if legal advice is required, we would be happy to refer you to Cayman Counsel for assistance.

 

Disclaimer: The information contained in this memorandum is of a general nature only and should not be relied on or construed as professional advice. Although every effort has been made to ensure the accuracy of the information, Citco Trustees (Cayman) Limited and The Citco Group Limited make no guarantee, representation or warranty in respect of the information and accept no liability as to its accuracy or completeness. No action should be taken based on the information in this memorandum without first consulting suitable advisors. No liability for any action taken or inaction, based on the information in this memorandum, is accepted.