Cayman Islands updates to the Beneficial Ownership Regime (“BOR”)

      On 24 November 2023, the Beneficial Ownership Transparency Act, 2023 (the "BOTA") was passed by the Cayman Islands Parliament.

      Regulations and Guidance Notes to support the BOTA are expected to be issued by the Cayman Islands authorities in the first half of 2024, following which the new BOTA provisions are anticipated to be introduced in a phased approach throughout 2024, with full implementation and compliance with the new BOR (under the BOTA) to be required by 1 January 2025. The current BOR will remain in effect until the BOTA comes into force.

      The key changes for investment funds to take note of are:

      • The BOR is currently enacted through several different pieces of legislation. The BOTA has consolidated the BOR under a single act, and it will be accompanied by Regulations and Guidance Notes
      • The new BOTA brings new entities into scope and includes all “Legal Persons” – including companies, LLCs, LLPs, limited partnerships, exempted limited partnerships (“ELPs”) and foundation companies
      • The definition of a ‘Beneficial Owner’ has been updated to mean an individual:
        • who ultimately owns or controls (directly or indirectly) 25% per cent or more of the shares, voting rights or partnership interests in the legal person
        • who otherwise exercises ultimate effective control over the management of the legal person
        • who is identified as exercising control of the legal person through other means
      • A person operating solely in the capacity of a ‘professional advisor’ or ‘professional manager’ (both terms defined in the BOTA) will not be considered a beneficial owner
      • The BOTA removes the exemptions that applied to the majority of investment funds in respect of the BOR. These exemptions are to be replaced with ‘alternative routes to compliance’
      • Subject to Parliament making further regulations, the BOR may require the Registrar to provide public access to beneficial ownership registrars.

      What are the alternative routes for investment funds to consider

      Relevant to the investment fund industry, legal persons who are Cayman Islands Funds registered under the Private Funds Act (As Revised) or the Mutual Funds Act (As Revised) will be required to supply the contact details of a licensed service provider (registered office or fund administrator) (the “PPoC”) located within the Cayman Islands that will provide beneficial ownership information to the Registrar on request within 24 hours.

      Waystone’s regulatory compliance solutions

      Waystone is monitoring the Regulations and Guidance Notes to align its current suite of Cayman Islands regulatory and compliance services to support investment fund clients and will provide a further update as to specific actions to be taken once the details of the Regulations and Guidance Notes have been finalised (currently subject to industry consultation).

      How Waystone can help

      If you have any questions about the BOR, or require assistance with any aspect of Cayman Islands regulatory compliance, please reach out to your usual Waystone representative or contact us below.

      Contact us

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