Government has released a bill that will require limited liability partnerships to maintain and update beneficial ownership registers.
The amendment to the Limited Liability Partnership Law exempts certain LLPs, such as those listed on the Cayman Islands Stock Exchange or another approved stock exchange and limited liability partnerships holding a license under a regulatory law. It also exempts LLPs that are special purpose vehicles, private equity funds, collective investment schemes and investment funds operated by an approved person.
The bill was published in the Cayman Islands Gazette on Oct. 24 and refers to both the Financial Action Task Force anti-money laundering recommendations and the Exchange of Notes with the U.K., which creates a mechanism to exchange beneficial ownership information related to Cayman entities with British law enforcement.
The bill aims to provide access to beneficial ownership registers of limited liability partnerships to Cayman’s competent authority via its search platform.
The Cayman Islands last year introduced a new beneficial ownership regime that collects details of the true owners of certain companies and limited liability companies (LLCs) in a centralized search platform at the registrar of companies. This platform is hosted offline and not connected to the internet or any other network.
The system relies on financial services providers maintaining their own beneficial ownership registers and uploading the information once a month to an encrypted flash drive or other medium, which is physically taken to the General Registry, where the information is uploaded via a dedicated terminal.
The platform can be interrogated at the request of U.K. law enforcement and beneficial ownership is typically provided within a day and in urgent cases within one hour.
The beneficial ownership regime does not directly apply to “foreign” companies or partnerships, but the bill would now extend it to LLPs.
Limited liability partnerships were introduced in Cayman in 2017 and are different from general partnerships, such as exempted limited partnerships. An LLP has the features of a general partnership, but it enjoys the benefit of being a separate legal person and it affords limited liability status to all its partners.
The bill requires LLPs to “engage a corporate services provider or the Registrar to establish a register of their beneficial owners and relevant legal entities.” The register must be maintained at the LLP’s registered office, and needs to be kept up-to-date.
Beneficial owners are defined as individuals who, directly or indirectly, hold a partnership interest or voting rights of more than 25 percent, or individuals who have the right to appoint or remove a majority of the managing partners or individuals who hold a majority of the voting rights.
The proposed law states that corporate services providers and the registrar must “provide the limited liability partnerships that engage them with an information technology solution that maintains their beneficial ownership registers and connects those registers with the search platform.”
It also requires corporate services providers to regularly deposit beneficial ownership information received from limited liability partnerships with the search platform.
LLPs that claim an exemption under the bill must file a declaration with the competent authority, indicating the grounds for the exemption.