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The Companies Law and the Limited Liability Companies Law of the Cayman Islands (Regime) requires certain Cayman Islands corporate entities (each a company) to maintain a beneficial ownership register (Register) at their relevant registered office, the information of which will be stored in encrypted form on a secure, stand-alone search platform established by the Minister of Financial Services of the Cayman Islands, as the competent authority (Competent Authority).
The purpose of the Regime, explains Piers Alexander, Partner at Conyers Dill & Pearman, is to make beneficial ownership information normally held by corporate service providers, “readily accessible to the Competent Authority in response to proper requests from specified law enforcement agencies (currently limited to those in the Cayman Islands and the United Kingdom). The search platform is not publicly accessible and may only be searched by or on behalf of the Competent Authority.”
Unless subject to an exemption, each company must take reasonable steps to identify any individual beneficial owner of the company and all relevant legal entities.
“Not all beneficial owners or relevant legal entities will be entered on the Register; only registrable persons. Registrable persons fall into two categories: (a) an individual beneficial owner who holds, directly or indirectly, more than 25 per cent of the shares or the voting rights in the company; or has the right, directly or indirectly, to appoint or remove the majority of the directors of the company; or has the legal right to exercise, or actually exercises, significant direct or indirect influence or control over the company through the ownership structure (other than solely as a director, professional adviser or professional manager) and (b) a relevant legal entity, which, in relation to the company, is incorporated, formed or registered under the laws of the Cayman Islands and would be a beneficial owner of the company if it were an individual,” explains Alexander.
The available exemptions to the Regime include any legal entity, or its subsidiary, which is either listed on the Cayman Islands Stock Exchange or an approved stock exchange; or registered or licensed under a Cayman Islands regulatory law (such as the Mutual Funds Law, the Securities Investment Business Law (SIBL) or the Banks and Trust Companies Law); or managed, arranged, administered, operated or promoted by an approved person as a special purpose vehicle, private equity fund, collective investment scheme or investment fund (Fund).
This article was first published in Hedgeweek.
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