Cayman’s beneficial ownership regime (the “Regime“) requires companies incorporated or registered by continuation[1] and limited liability companies in Cayman (each a “Company“) (except those which fall within an exemption under the Regime) to identify, record and maintain the details of qualifying beneficial owners (each a “Registrable Person“). The Regime[2] requires corporate services providers (each a “CSP“) to collect data in respect of certain Companies and any Registrable Persons and arrange for this information to be maintained in a secure and centralized beneficial ownership platform (the “BO Platform“), accessible only to the Minister of Financial Services in Cayman (the “Competent Authority“)[3]. Similar arrangements for a central record of beneficial ownership information are in place in all other British Overseas Territories and Crown Dependencies with the aim of ensuring that beneficial ownership information is accessible by tax and law enforcement authorities in accordance with international standards.

Measures have been taken to protect the privacy and security of personal information held on the BO Platform including the utilization of an air-gapped system with no external connectivity. The BO Platform is not publicly available and may only be searched by the Competent Authority upon a formal request of designated Cayman or UK law enforcement authorities made in respect of financial crime, money laundering and regulatory or tax matters[4].

Who qualifies as a Registrable Person?

A Registrable Person for a Company is an individual who:

  1. holds directly or indirectly, more than 25% of its shares[5];
  2. holds directly or indirectly, more than 25% of the voting rights[6];
  3. holds directly or indirectly, the right to appoint or remove a majority of its directors or managers;
  4. has the absolute and unconditional legal right to, or actually does, exercise significant influence or control over a Company; or [7]
  5. has the absolute and unconditional legal right to exercise, or actually exercises, significant influence or control over the activities of a trust or partnership or other entity which is the beneficial owner of a Company.

Can a legal entity be a Registrable Person?

Yes. A legal entity which is incorporated, formed or registered in Cayman and which would be a beneficial owner of the Company if it were an individual is a Registrable Person.

How may a Company comply with the requirements of the Regime?

A Company which falls within the scope of the Regime (“In-Scope Company“) is required to:

  1. identify any Registrable Persons;
  2. if applicable, issue a written notice requiring beneficial owners to confirm their status as Registrable Persons[8];
  3. if applicable, request that Registrable Persons provide or confirm prescribed beneficial owner information (“Required Particulars“); and
  4. record the Required Particulars of all Registrable Persons in a beneficial ownership register (“Register“)[9].

What Required Particulars must be recorded in the Register for an In-Scope Company?

The Required Particulars to be recorded and maintained for a Registrable Person are:

  1. for an individual:
    1. full legal name;
    2. residential address;
    3. date of birth;
    4. details from passport, drivers licence or national ID card; and
    5. if applicable, the date on which the individual became or ceased to be a Registrable Person.
  2. for a legal entity:
    1. name;
    2. registered or principal office;
    3. type of entity and governing law;
    4. if applicable, the registration number and the register in which it is entered; and
    5. if applicable, the date on which it became or ceased to be a Registrable Person.

Where applicable, appropriate notations must be made in the Register of an In-Scope Company if:

  1. it is known that the Company has no Registrable Person, or none has been identified after reasonable steps have been taken;
  2. the Required Particulars of the Registrable Person have not been confirmed; or
  3. the Company’s in still in the process of taking steps to find out if there is anyone who is a Registrable Person.[10]

Are there any Companies which are exempt from the Regime?

Yes. Companies (including their subsidiaries) which fall outside of the scope of the Regime (“Out-of-Scope Company“) include those:

  1. listed on the Cayman Stock Exchange or an approved stock exchange[11];
  2. registered or holding a licence under a “regulatory law”[12] (other than a Company which is a registered person in accordance with section 5(4) of the Securities Investment Business Law (2020 Revision), for example a Cayman Islands registered mutual fund;
  3. managed, arranged, administered, operated or promoted by an “approved person”[13] as a special purpose vehicle, private equity fund, collective investment scheme or investment fund, including where the vehicle, fund or scheme is a Cayman exempted limited partnership;
  4. regulated in a jurisdiction with equivalent anti-money laundering legislation[14];
  5. named as a general partner of a vehicle, fund or scheme referred to in paragraph (c), which vehicle, fund or scheme –
    • is registered or holds a licence under a regulatory law; or
    • is managed, arranged, administered, operated or promoted by an approved person;
  6. holding directly a legal or beneficial interest in the shares of a legal entity licensed under the Banks and Trust Companies Law (2020 Revision), the Companies Management Law (2018 Revision), the Insurance Law (2010 Revision), Part III of the Mutual Funds Law (2020 Revision) or the Securities Investment Business Law (2020 Revision); or
  7. exempted under the laws governing the Regime.

Does a Company have any ongoing obligations to ensure compliance with the Regime?

Each Company has a duty to engage a CSP[15] for the purposes of ensuring compliance with the requirements of the Regime.

An In-Scope Company must:

  1. keep the Register at its registered office;
  2. notify its CSP in writing when any change in the Required Particulars occurs; and
  3. provide its CSP with the Required Particulars necessary to maintain the Register and keep it up to date.

An Out-of-Scope Company must provide its CSP with:

  1. a written confirmation of its exemption, indicating the basis on which it is exempted (“Declaration“)[16];
  2. if applicable, prescribed information about the regulated legal entity, regulated parent entity or approved person as may be relevant to the exemption;
  3. instructions that the Declaration or any amendment thereof is to be filed with the Competent Authority; and
  4. an amended Declaration if any part of its written confirmation ceases to be true.

What are the consequences of the failure to comply with the requirements of the Regime?

Where a Registrable Person fails to provide the Required Particulars, an In-Scope Company may issue a restriction notice to such Registrable Person and send a copy thereof to the Competent Authority.[17] An In-Scope Company that knowingly and willfully contravenes the requirements to establish or maintain a Register commits an offence and is liable on summary conviction for each contravention to a fine of US$30,487.80[18]. Failure to provide the Required Particulars, to keep the Register up to date and to provide the Declaration may also constitute offences[19].

[1] These companies include exempted companies, exempted segregated portfolio companies and ordinary (local) companies.

[2] The Companies Law (2020 Revision), Beneficial Ownership (Companies) Regulations (2019 Revision), and the Beneficial Ownership (Limited Liability Companies) Regulations (2019 Revision govern the regime.

[3] The Minister of Financial services may delegate this function.

[4] Certain senior officials representing bodies, such as the Cayman Islands Monetary Authority, and the Financial Reporting Authority, the Financial Intelligence Unit, the Tax Information Authority, the Anti-Corruption Commission and other public or self-regulatory body assigned responsibility for monitoring of the money laundering in the Cayman Islands may request a proper and lawful search of the beneficial ownership platform.

[5] If two (2) or more persons each hold a share or right jointly, each of them is treated as holding that share or right.

[6] Voting Rights means the rights conferred on shareholders or members to vote at general meetings of a Company or equivalent rights for a legal entity that does not have general meetings.

[7] Such person must directly or indirectly hold 25% of the shares or voting rights of the Company or have the right to appoint or remove a majority of the directors or managers. A director, professional advisor or professional manager who exercises control in such capacity will not be deemed to be a beneficial owner.

[8] The notice may require the addressee to advise within one (1) month whether they know the identity of any Registrable Person. The Company is not required to issue a notice if it knows that a person is not a Registrable Person or if it has the Required Particulars.

[9]  An In-Scope Company is not required to issue a notice if it knows that a person is not a Registrable Person or if it has the Required Particulars. Where the In-Scope Company has taken reasonable steps to identify all its beneficial owners and has not been able to identify any Registrable Person, this must be stated in its Register

[10] Part 2 Beneficial Ownership (Companies) Regulations (2019 Revision).

[11] Approved stock exchanges are listed in Schedule 4 of the Companies Law (2020 Revision).

[12] A “regulatory law” means any one of the Banks and Trust Companies Law (2020 Revision); the Building Societies Law (2020 Revision); the Companies Management Law (2018 Revision); the Cooperative Societies Law (2020 Revision); the Insurance Law, 2010; the Money Services Law (2020 Revision); the Mutual Funds Law (2020 Revision); and the Securities Investment Business Law (2020 Revision).

[13] An “approved person” which includes any subsidiary, is a) regulated, registered or holding a licence in the Cayman Islands under a regulatory law; b) regulated in a jurisdiction as set out in note 10; or c) listed on the Cayman Islands Stock Exchange or an approved stock exchange.

[14] Such jurisdictions deemed to have equivalent anti-money laundering legislation to that of the Cayman Islands are set out in a list published by the Anti-Money Laundering Steering Group. The current list includes Argentina, Australia, Austria, Bahamas, Bahrain, Barbados, Belgium, Bermuda, Brazil, British Virgin Islands, Canada, Curacao, Cyprus, Denmark, Finland, France, Germany, Gibraltar, Greece, Guernsey, Hong Kong, Iceland, India, Ireland, Isle of Man, Israel, Italy, Japan, Jersey, Liechtenstein, Luxembourg, Malta, Netherlands, New Zealand, Norway, People’s Republic of China, Portugal, Singapore, Spain, Sweden, Switzerland, United Arab Emirates, United Kingdom and the United States of America.

[15] A CSP must be an individual or legal entity that provides corporate services under the Companies Management Law (2018 Revision), the Banks and Trust Companies Law (2020 Revision), the Insurance Law, 2010 or any other regulatory law pursuant to which the CSP is licensed or permitted to provide registered office services.

[16] In the case of an Ordinary Resident Company, the Required Particulars or the Declaration may be provided to the Registrar of Companies.

[17] The effects of the restrictions notice with respect to the Registrable Person’s interest include rendering void any transfer or agreement to transfer the interest and the restriction of the exercise of rights related to the interest.

[18] If the offence is a continuing one, the Company is liable on summary conviction to a fine of US$600.00 for each day or part thereof, during which the offence continues up to a maximum of US$30,487.80.

[19] Where a Company is guilty of any such offences committed with the consent or connivance of a director or other officer, that director or other officer is guilty of the same offence and liable to the same penalty.

This note is intended to be a general guide only and should not be relied upon as a substitute for specific legal advice. If you would like further information on any aspect of this note or on any other Cayman Islands legal issue please contact:

Janet Francis
Corporate & Commercial Practice Group
Tel.: 1 345 815 2807