Cayman Islands Updates to the Beneficial Ownership Regime (the “BOR”)
In scope entities are required to identify their registrable beneficial owners (“RBOs”) and provide details of such RBOs to their corporate services provider (“CSP”), unless an ‘alternative route to compliance’ is available. CSPs are required to maintain a beneficial ownership register for each in scope entity without availing of an alternative route to compliance and submit the beneficial ownership information to the General Registry (the “Competent Authority”).
Key changes impacting Cayman Islands entities
Consolidation of legislation
The BOR was previously enacted through several different pieces of beneficial ownership legislation. The BOTA has consolidated the legislation under a single act, and is accompanied by the Regulations and Guidance.
Updated definition of ‘beneficial owner’
The definition of a ‘beneficial owner’ has been updated. An individual will be considered a beneficial owner if they meet any of the following conditions:
- (a) the individual ultimately owns or controls (directly or indirectly) 25% or more of the shares, voting rights, or partnership interests in the entity
- (b) the individual exercises ultimate effective control over the management of the entity
- the individual is identified as exercising control of the entity through other means, including as a senior managing official, where no individual exerts ownership or control as described in (a) or (b).
Expanded scope of BOTA
The BOTA expands the scope of the BOR to include limited partnerships and exempted limited partnerships, in addition to companies, limited liability companies, limited liability partnerships, foundation companies.
Removal of exemptions and alternative compliance routes
The BOTA removes exemptions previously available for mutual funds, private funds, general partners, carry vehicles, debt issuance vehicles, special purpose vehicles, blockers, trading subsidiaries, and entities registered under the Securities Investment Business Act (“SIBA Registered Persons”). Some of these exemptions have been replaced with ‘alternative routes to compliance’.
Alternative routes to compliance
The BOTA provides alternative routes to compliance for certain categories of legal persons, being those that are:
a) listed on an approved stock exchange,
b) licensed/regulated directly by the Cayman Islands Monetary Authority (“CIMA”) or
c) registered with CIMA under the Mutual Funds Act or Private Funds Act.
If a relevant legal person elects an alternative route to compliance, its CSP is no longer required to maintain and submit beneficial ownership information to the Competent Authority. Each relevant legal person wishing to avail an alternative route to compliance must provide their CSP with:
- written confirmation of the category into which they fall
- the required particulars specific to their category, as outlined below.
Categories and required particulars
- Legal person listed on an approved stock exchange
- Required particulars: name and jurisdiction of the stock exchange, and, where applicable, details of the relationship to the listed entity.
- Legal person licensed under a regulatory law
- Required particulars: identification of the regulatory law under which the legal person is licensed.
- Investment fund registered under the Mutual Funds Act or the Private Funds Act (“Fund”)
- To avail of the alternative route to compliance, a Fund must appoint a Contact Person responsible for responding to requests for beneficial ownership information from the Competent Authority. The Fund will then provide the Contact Person’s details to its CSP, rather than having to provide its RBOs. The Contact Person must be either:
- a fund administrator licensed under the Mutual Funds Act; or
- another legal person located within the Cayman Islands who is licensed or registered under regulatory law.
- To avail of the alternative route to compliance, a Fund must appoint a Contact Person responsible for responding to requests for beneficial ownership information from the Competent Authority. The Fund will then provide the Contact Person’s details to its CSP, rather than having to provide its RBOs. The Contact Person must be either:
- The Contact Person is required to provide a Fund’s beneficial ownership information to the Competent Authority within 24 hours of a request or within any other timeframe specified in the request. As such the Contact Person must have appropriate access to the Fund’s beneficial ownership information, which would typically be maintained by the Fund’s administrator.
- Waystone Corporate Services (Cayman) Ltd. can act as a Fund’s Contact Person in certain circumstances. Please reach out to your usual Waystone representative or contact us below to learn more.
Compliance for SIBA Registered Persons
SIBA Registered Persons are now required to maintain a beneficial ownership register. There is no alternative route to compliance available under the BOTA.
How Waystone can help
If you have any questions about the BOTA or appointing a Contact Person, or require assistance with any aspect of Cayman Islands regulatory compliance, please reach out to your usual Waystone representative or contact us below.