Government to tweak beneficial ownership regime

The Cayman Islands government has released three bills “to refine and improve” the beneficial ownership regime by amending the laws governing companies, limited liability companies and limited liability partnerships.

They clarify the definition of beneficial owner as “an individual who holds, whether directly or indirectly, 25% or more of the shares or voting rights of a company” and detail corporate-service provider responsibilities.

Under the bills, service providers must take reasonable steps to identify all relevant legal entities that exist in relation to a client company. They must also notify the beneficial owners, relevant legal entities and any registrable person linked to their client companies.

Service providers would be able to rely, without further enquiry, on the information they receive in response unless they have reason to believe that it is misleading or false.

Anyone who should be named on a beneficial ownership register but is not, because they have not received a notice from the company or service provider, has a duty under the proposed changes to notify the service provider with the required details.

Other amendments require a corporate service provider that functions as a registered office for an exempted, ordinary non-resident or special economic zone company, to establish and maintain the beneficial ownership register for the client.

In addition, the bills empower the Registrar of Companies as the relevant authority to request additional information from a company or corporate services provider and to search the beneficial ownership register of a company to verify the accuracy of the information provided by the company or a services provider.

The proposed amendments would also remove the requirement for a senior official to certify that a request to search a company’s beneficial ownership register is proper and lawfully made before the competent authority may execute the search.

Additionally, the bills refine available exemptions and propose fines for companies and corporate service provider who wilfully fail to comply with their duties under the law.

“These changes will strengthen the beneficial ownership regime in the Cayman Islands,” the Ministry of Financial Services said in a press release.