Changes to the Cayman Islands Beneficial Ownership Regime (October 2024)
DISCLAIMER: This post was last modified on 7 October 2024. Some information in this article may not be updated.
Introduction
The beneficial ownership regime in place in the Cayman Islands was consolidated into the Beneficial Ownership Transparency Act, 2023 (the “Act”) on 24 November 2023 when the Parliament of the Cayman Islands passed the Act which was gazette on 15 December 2023. The Act and its Beneficial Ownership Transparency Regulations, 2024 (the “Regulations”) came into effect on 31 July 2024. Full implementation is expected early in 2025.
The Beneficial Ownership Regime (“BOR”) of the Cayman Islands
The previous BOR applied only to companies, LLCs and LLPs. The Act brings new entities into scope and applies to all “legal persons” who will be required to comply with the Cayman ultimate beneficial owner regime. Legal persons include companies, foundation companies, LLCs, LLPs, limited partnerships and exempted limited partnerships. A legal person will be required to identify and provide appropriate information or particulars related to the beneficial owners or to identify any alternative route to compliance undertaken by the legal person.
Alternative Routes to Compliance
Legal persons may avail themselves of alternative routes to compliance with the Act. Legal persons will have to provide written confirmation to their Cayman Islands corporate services provider (“CSP”) of the category into which they fall and also provide the appropriate particulars specific to the relevant category of legal person as set out 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 |
| 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 |
| An entity otherwise exempted by Cabinet | None currently |
Contact Person
Regulated investment funds can choose to appoint a Contact Person responsible for responding to requests for beneficial ownership information from the Competent Authority in relation to that legal person. The Contact Person must either be a fund administrator licensed under the Mutual Funds Act or another person located within the Cayman Islands who is licensed or regulated under a regulatory law.
SIBA Registered Persons
SIBA Registered Persons will not have an alternative route to compliance with the Act and therefore
must maintain a beneficial ownership register when the respective provisions of the Act come into
force.
Key changes in the Act
A. Extension of the scope of the Act to cover legal persons as discussed above;
B. The definition of “Beneficial Owner” will include an individual person if any of these conditions
are met:
(i) the individual ultimately owns or controls (directly or indirectly) 25% or more of the shares, surplus property, voting rights or partnership interests in the entity.
(ii) the individual otherwise exercises ultimate effective control over the management of the entity.
(iii) the individual is identified as exercising control over the entity through other means where there is no individual who exerts control or ownership under (i) or (ii) above.
C. Particulars which must be obtained regarding relevant legal entities and beneficial owners are
set out below:
| Current requirements | Additional requirements | |
|---|---|---|
| Beneficial owner | • Full legal name • Residential address • Address for service of notices • Date of birth • Identification number, country of issue, dates of issue and expiry (must be government-issued document) • Dates when the person became and ceased to be a beneficial owner | • Nationality • Nature of the individual’s ownership or control of the legal person |
| Reportable legal entity | • Corporate/firm name • Registered or principal office • Legal form and governing law • If applicable, register of companies and registration number • Dates when the entity became and ceased to be a relevant legal entity |
D. Under the Act, the Cabinet may, subject to resolution in Parliament, make further regulations to permit the Registrar to provide public access to certain required particulars of registrable persons. The Cayman Islands Government is progressing with the provision of access to the beneficial ownership register for those members of the public who meet a “legitimate interest test”. Parties genuinely seeking information for the prevention and combat of money laundering and terrorist financing, for example, are being considered for such permission.
Obligations under the Act
A legal person without an alternative route to compliance will have to provide the above particulars related to its registerable persons to the CSP that maintains the entity’s beneficial ownership register in the Cayman Islands.
Consequently, the CSP must review those particulars and take reasonable measures to verify the identity of the registrable persons using information from reliable sources. The corporate services provider must, therefore, be satisfied the particulars are adequate, accurate and current before entering them in the beneficial ownership register.
For assistance in understanding your obligations under the Act or to enquire about Bolder’s BO and Contact Person services, please contact Stefanie Suckoo at stefanie.suckoo@bga.law or (345) 769-1618 or Rainier Crouse at rainier.crouse@boldergroup.com or (345) 769-1618.
Bolder Group does not provide financial, tax or legal advice and the information contained herein is meant for general information purposes only. We strongly recommend that before acting on any of the information contained herein, readers should consult with their professional advisers. The Bolder Group accepts no liability for any errors or omissions in the information, or the consequences resulting from any action taken by a reader based on the information provided herein.
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