Cayman Beneficial Ownership Regime Update

With effect from 1 July 2017, relevant Cayman Islands companies (“Relevant Companies”) have been required to prepare and maintain a register of beneficial owners (the “Register of Beneficial Owners”).

This Register of Beneficial Owners is required to be submitted to a search platform maintained by the Cayman Islands government on a monthly basis and such submissions have already begun. 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.

The Cayman Islands government has also proposed amendments to the laws which implemented the beneficial ownership regime and these are currently subject to an ongoing consultation. If implemented, these changes could remove some of the exemptions currently available and all require ‘out of scope’ entities to issue a written notice to their corporate service providers confirming such status. It remains to be seen as to when and if such changes will materialise.

Read the Beneficial Ownership Legal Update.