Cabinet has approved the Beneficial Ownership (Limited Liability Partnership) Regulations, 2019 before the Limited Liability Partnership (Amendment) Law will take effect later this year.
The regulations will require limited liability partnerships to file beneficial ownership information with the General Registry in much the same way limited liability companies and other types of companies are doing so already.
The changes come in response to both Financial Action Task Force anti-money laundering recommendations and the Exchange of Notes with the U.K., which created a mechanism to exchange beneficial ownership information related to Cayman entities with British law enforcement.
Last year lawmakers passed an amendment to the Limited Liability Partnership Law that provides access to beneficial ownership registers of limited liability partnerships to Cayman’s competent authority via its search platform.
Limited liability partnerships were introduced in Cayman in 2017 and are different from other types of partnerships, such as exempted limited partnerships, in that they are separate legal entities that afford limited liability status to all its partners.
In the Cayman Islands, corporate services providers collect and maintain beneficial ownership information of legal persons in the jurisdiction. This information can then be requested and shared by a local competent authority through various agreements, treaties, and memorandums of understanding agreed between the Cayman Islands and other jurisdictions.
To speed up the information exchange process, Cayman developed a centralised beneficial ownership platform at the General Registry to which regulated service providers regularly submit updated information on the owners of Cayman-registered entities.
The amended limited liability partnership law extends this system to LLPs by stipulating 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”.
Once LLPs have provided their service provider with the relevant beneficial ownership information, the register has to be kept up-to-date and is maintained at the LLP’s registered office. Corporate services providers then regularly deposit beneficial ownership information received from limited liability partnerships with the centralised search platform.
The law defines beneficial owners 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 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 licence under a regulatory law. LLPs that are special purpose vehicles, private equity funds, collective investment schemes and investment funds operated by an approved person are also exempt.
LLPs that claim an exemption under the law must file a declaration with the competent authority, indicating the grounds for the exemption.