Although not yet in force (see below), the Cayman Islands has introduced a series of laws and regulations which will require all Cayman Islands companies and limited liability companies (LLCs) to take reasonable steps to identify, record and maintain the details of all `beneficial owners' defined as including any individuals who hold, directly or indirectly, more than 25% of the shares, capital, voting rights or the right to appoint or remove a majority of the directors or managers of the company or LLC. The new laws will also treat as beneficial owners those persons who have the right to, or actually do, exercise significant influence or control over the company or LLC and will also apply in relation to a trust where the trustees qualify as beneficial owners and to any persons who have the right to, or actually do, exercise significant influence or control over the trust.
Companies and LLCs will also have to identify, record and maintain the details of certain intermediate structures incorporated, formed or registered in the Cayman Islands and which would be a beneficial owner were it an individual, referred to as `relevant legal entities'.
Who is exempt from the requirements?
Importantly, there are number of exemptions from the requirements of the new laws. The new laws do not apply to partnerships including limited partnerships, nor do they apply directly to foreign companies. The new laws also do not apply to companies or LLCs which are, or are a subsidiary of, one or more entities each of which is:
(1) listed on the Cayman Islands Stock Exchange or an `approved stock exchange['3];
(2) registered or holding a licence under a `regulatory law';
(3) managed, arranged, administered, operated or promoted by an approved person as a special purpose vehicle, private equity fund, collective investment scheme or investment fund;
(4) a general partner of a vehicle, fund or scheme referred to in paragraph (3) that is managed, arranged, administered, operated or promoted by an approved person; or
(5) exempted by the regulations.
Who has access to the register?
The register of beneficial owners and relevant legal entities is not public and will only be accessible by the Cayman Islands Government Minister with responsibility for Financial Services. Further, the registers can only be searched by the Minister upon a lawful request by designated senior officials of certain Cayman Islands regulatory and/or law enforcement authorities or by lawful request from certain overseas law enforcement authorities who have been specifically authorised for this purpose. At present, only the UK authorities will be granted this status.
What steps do companies and LLCs need to take?
For those companies and LLCs which are not exempt from the new laws, they must proceed to identify, record and maintain the identity of registrable persons (beneficial owners and relevant legal entities), and in so doing they are required to engage a corporate services provider (CSP) to establish and maintain the register.
To gather the required information on registrable persons, each company and LLC must issue a notice to all persons identified as beneficial owners or relevant legal entities. The notice must require those persons to confirm, within one month from the date of receipt of the notice, their status as a registrable person and to confirm, amend and/or supplement the required particulars set out in or missing from the notice. Companies and LLCs are also able to serve notice on persons whom they have reasonable cause to believe knows the identity of a registrable person. Companies and LLCs are entitled to rely on the responses received unless they have reason to believe that the information provided is misleading or false.
The information gathered must then be provided to the CSP engaged by the company or LLC and must include certain details on an individual including (a) name (b) residential address (c) date of birth (d) details from passport, drivers licence or national ID card. For entities it must include, (1) name (b) registered or principal office (c) type of entity and governing law (d) registered number.
When will the new laws be brought into force?
It is expected that the new laws will be brought into force by 30 June, 2017.