At midnight on June 30 2017 the deadline passed for legal entities to file details of beneficial ownership and control with Jersey's Companies Registry. Under the revised rules, even if there had been no change to the relevant information since incorporation, legal entities were still required to file the relevant form before the deadline. The legal entities affected were companies, limited partnerships (including incorporated and separate limited partnerships), limited liability partnerships and foundations, although it is anticipated that the requirement to file in respect of foundations will not come into force until later in the year. There was no requirement to file in respect of trusts, given that trusts are not legal entities.
The new register is the product of the 2016 agreement between Jersey and the UK government to improve the exchange of information about the ownership and control of companies and other legal entities.
The requirement to submit information of this kind is not a new concept; a register has existed in some form in Jersey since 1989. Since then, Jersey-registered legal entities have had to provide details of beneficial ownership on their incorporation. Further, trust company service providers (TCSPs) must retain full details of beneficial ownership and control and to provide these details to the Jersey Financial Services Commission (JFSC) on request.
Unlike the United Kingdom's Register of People with Significant Control, the new register will not be publicly accessible. Its data will be shared only with UK law enforcement and tax authorities for the purposes of preventing corruption, money laundering, terrorism financing, financing of the proliferation of weapons of mass destruction and other serious and organised crime.
While the deadline for the initial disclosure has passed, there are ongoing compliance obligations to keep in mind. The Companies Registry must be notified of any changes to beneficial ownership and control within 21 days. Although such obligations fall on the entity itself, in practice, the relevant TCSP – which provides administration services to the entity – will make the notification. Where the TCSP provides limited services (eg, the provision of a company's registered office only), the TCSP is likely to rely on its client to provide details of any changes to beneficial ownership and control. Therefore, TCSPs may need to amend their terms and conditions of business so that this information is provided by the client.
In addition, while 'beneficial ownership' is relatively simple to define, 'control' is less so. Accordingly, for more complex structures, legal advice may be needed to clarify the obligations.
The Companies Registry applies the Financial Action Task Force standards in respect of beneficial ownership and control. The register's model relies on the three-tier approach as set out in the JFSC Anti-money Laundering Handbook. This defines individuals with 'control' of companies as follows:
- each individual with a material controlling ownership interest in the capital of the company (through direct or indirect holdings of interests or voting rights) or who exerts control through other ownership means;
- to the extent that there is doubt as to whether the individuals exercising control through ownership are beneficial owners, or where no individual exerts control through ownership, any other individual exercising control over the person through other means; and
- where no individual is otherwise identified under this section, individuals who exercise control of the company through positions held (who have and exercise strategic decision-taking powers or have and exercise executive control through senior management positions).
For further information on this topic please contact Richard Laignel or Rachel Moynihan at Ogier by telephone (+44 1534 514 000) or email (firstname.lastname@example.org or email@example.com). The Ogier website can be accessed at www.ogier.com.
This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.