The government of the Cayman Islands has passed legislation that requires certain Cayman Islands companies (including LLCs) to be included on a centralised beneficial ownership register (UBO Register). The passing of this legislation comes in response to the United Kingdom’s (UK’s) request for the Cayman Islands – as well as a number of other British Overseas Territories – to develop fully public registers of ownership. Unsurprisingly, this request was met with reluctance on behalf of the British Overseas Territories.
As an alternative, Cayman and other jurisdictions will be implementing a centralised system that will allow the UK government, and other foreign authorities with agreements in place, to access a UBO Register, via the Competent Authority, swiftly in response to proper and lawful requests. While not being what was initially desired by the UK government, this compromise has been accepted.
The new register will not be publicly accessible, until such a time that such access is required as an international standard. At present, the UK is the only government with the necessary agreements in place to access the information. Domestic bodies, such as the Cayman Islands Monetary Authority, may also access the information via the Competent Authority – referring to any person or organisation that has the legally delegated authority to perfrom this particular function.
Harney’s, the international offshore law firm, described the implementation of this solution as striking ‘a sensible balance by enabling law enforcement authorities to have access to the information they need in cases where people abuse the corporate veil, while continuing to protect the privacy of legitimate commercial interests and individuals’. The hope is that this regime will aid law enforcement agencies in their fight against tax evasion and money laundering.
Those that are to be included in the register must ultimately own or control more than 25 per cent of the equity interest, voting rights or have the right to appoint or remove a majority of a company’s directors or LLC managers. It may also be required that certain intermediate holding companies, through which such interests are held, are listed.
Until now, entities incorporated in Cayman, under Companies Law or Limited Liability Company Law, were required to keep local registers. These local registers must still be kept, and updated within a month of any changes. However, these separate registers may now be accessed via a centralised system by the Competent Authority. Precise details of how the platform will function in practice however, have not yet been announced.