The Cayman Islands government has approved legislative changes to be implemented from 1 July 2017 which will require relevant companies (“Relevant Companies”) to prepare and maintain a register of beneficial owners (the “Register of Beneficial Owners”). This important development is further evidence of Cayman’s progressive and proportionate approach to transparency whilst protecting the fundamental principle of confidentiality in legitimate business and personal dealings. The development of the new beneficial ownership regime is borne out of requests from the UK government that the Crown Dependencies and British Overseas Territories each develop and provide a central public register of beneficial ownership. Cayman has instead agreed a proportionate comprise - an enhancement of its existing regime concerning the collection of beneficial ownership information which will not be publicly accessible.
Under the new legislation a Relevant Company is required to prepare and maintain a Register of Beneficial Owners. This information will then be accessible by the appointed competent authority of the Cayman Islands and available for automatic exchange with, and only in the event of a legitimate and lawful request from, the relevant law enforcement or tax authority in the Cayman Islands or the UK. Currently, the new regime only provides for the mutual exchange of beneficial ownership information with the UK but there is scope for this to be expanded if and when agreements are reached with other countries. The purpose of this development is to provide a mechanism for the appropriate authorities to easily identify the ultimate beneficial owners of a company to aid with cross-border investigations.
Importantly for the funds industry Relevant Companies do not include partnerships and therefore many of the private equity funds in Cayman are excluded. Registered mutual funds and investment management companies incorporated in the Cayman Islands which fall under the regime in the Securities Investment Business Act (2015 Revision) are also excluded. Other exemptions apply and all funds should take steps to identify which, if any, exemption applies to their fund and memorialising this in board resolutions. Please let us know if we can assist you with this process.
Read the Beneficial Ownership Legal Update.
This publication is for general guidance and is not intended to be a substitute for specific legal advice. Advice should be sought about specific circumstances.
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