In 2017 the legislation of Cayman Islands regulating collection, keeping and disclosure of information regarding beneficial owners of companies was amended. The registers of beneficial owners were to be filed before 29 June 2018.
In accordance with subsection 3 of section 247 of Companies Law a natural person is deemed to be the beneficial owner of legal entity:
a) if he holds, directly or indirectly, more than 25% of the shares in company;
b) if he holds, directly or indirectly, more than 25% of the voting rights in company;
c) if he holds, directly or indirectly, the right to appoint or remove a majority of the board of directors of company.
All legal entities incorporated in Cayman Islands are obliged to take all necessary steps to identify their beneficial owners, to establish a register of beneficial owners, to keep it at the registered office address and to file it with the competent authorities. In case if a company has no beneficial owner, it must identify a relevant legal entity that would be a beneficial owner of the company in terms of subsection 3 of section 247 if it were an individual.
The registers must contain the following information about beneficial owners:
- Full legal name;
- Residential address and, if different, an address for service of notices under this Law;
- Date of birth;
- Information identifying the individual from their passport, driver’s license or other government-issued document, including
a) identifying number;
b) country of issue;
c) date of issue and expiry;
- The date on which the individual became or ceased to be a registrable person in relation to the company in question.
Regarding relevant legal entities, the following particulars shall be entered into the registers:
- Corporate or firm name;
- Registered or principal office;
- The legal form of the entity and the law by which it is governed;
- If applicable, the register of companies in which it is entered and its registration number in that register;
- The date on which it became or ceased to be a registrable person in relation to the company in question.
While identifying the beneficial owner the company must require him/her to provide the information necessary for the register by sending a written notice. If the beneficial owner does not provide such information within one month after the receipt of written notice, the company is obliged to apply restrictions in relation to such beneficial owner, and send the copy of restriction notice to the competent authority.
Such restrictions are as follows:
- Any transfer or agreement to transfer the interest is void;
- No rights are exercisable in respect of the interest;
- No shares may be issued in respect of the interest or in pursuance of an offer made to the interest-holder;
- Except in a liquidation, no payment may be made of sums due from the company in respect of the interest, whether in respect of capital or otherwise;
- Other than in a liquidation, an agreement to transfer right to be issued with any shares issued in respect of the relevant interest or a right to receive payment of any sums due from the company in respect of the relevant interest in relation to the relevant interest is void.
The Companies Law also contains a list of companies exempted from obligations to draw up, keep and file registers of beneficial owners. In accordance with subsection 1 of section 245 of Companies Law such companies are:
- Listed on the Cayman Islands Stock Exchange or an approved stock exchange;
- Registered or holding a license under a regulatory law;
- Managed, arranged, administered, operated or promoted by an approved person as a special purpose vehicle, private equity fund, collective investment scheme or investment fund, including where the vehicle, fund or scheme is a Cayman Islands exempted limited partnership;
- Regulated in a jurisdiction included in a list published by the Anti-Money Laundering Steering Group of countries and territories whose Anti-Money Laundering legislation is deemed to be equivalent to the Anti-Money Laundering legislation of Cayman Islands;
- A general partner of a vehicle, fund or scheme which vehicle, fund or scheme is registered or holds a license under a regulatory law or is managed, arranged, administered, operated or promoted by an approved person;
- Holding directly a legal or beneficial interest in the shares of a legal entity which holds a license under the Banks and Trust Companies Law, the Companies Management Law, the Insurance Law, the Mutual Funds Law or the Securities Investment Business Law;
- Exempted by the Regulations.
The registers of beneficial owners must be filed to the competent authority named Minister of Financial Services in electronic form by using special online service. The data from such registers is not publicly available. Moreover, such data may be disclosed only in cases prescribed by Cayman Islands legislation and only to government bodies listed in Companies Law. They are:
- The financial intelligence unit;
- The Financial Reporting Authority;
- The Cayman Islands Monetary Authority;
- The Anti-Corruption Commission;
- The Tax Information Authority;
- Any other body which is assigned responsibility in accordance with criminal legislation.
In case if legal entity willfully contravenes its obligations with respect to the beneficial owners registers filing before 29 June 2018 or the imposition of restrictions on beneficial owners, it will be liable to a fine of 25 000 Cayman dollars (30 500 USD) for the contravention itself, plus 500 Cayman dollars (610 USD) for each day of delay, up to a maximum of 25 000 Cayman dollars (30 500 USD).