Following lengthy discussions with the UK authorities, the Cayman Islands Government has now approved new legislation to introduce beneficial ownership registers for certain Cayman Islands companies or limited liability companies (each a Company and together Companies), as we detailed in our client update in January. The new legislation was published on 7 April 2017 and will come into force on 1 July 2017.
What does this mean for the investment funds industry?
Essentially, Companies which are subject to some form of direct or indirect regulatory oversight are likely to be exempt from the requirements to maintain a beneficial ownership register.
For the investment funds industry, this means that Companies which are structured as Cayman Islands investment funds, whether hedge funds or private equity funds, Cayman Islands investment managers, which are registered as “Excluded Persons” under the Securities and Investment Business Law (SIB Law), and general partners of private equity funds or other investment funds, will not have to maintain beneficial ownership registers provided they fall within one of several exemptions contained in the legislation.
There are currently no proposals to extend the registers to cover beneficial ownership of limited partners of Cayman Islands exempted limited partnerships or foreign companies and foreign limited liability companies registered in the Cayman Islands.
Who will have access to beneficial ownership register information?
The UK authorities will be able to request that a search of information held on registers be done by the Competent Authority in the Cayman Islands and, in the future, other jurisdictions entering into similar agreements with the Cayman Islands may also be able to request a search. The register will otherwise be private and confidential and not open to public inspection. The Cayman Islands Government has confirmed that it will not consider the introduction of a public register of beneficial ownership unless and until that becomes an accepted and implemented international standard.
What action is required today?
The legislation comes into force on 1 July 2017 and all Cayman Islands Companies should now review whether or not they will be required to maintain a beneficial ownership register or if they fall within one of the exemptions in the legislation. Where a Harneys affiliate provides the registered office for a Cayman Islands Company, we will be contacting clients to assist them with compliance with the legislation, when applicable.
For more details of the exemptions and the regime which applies to those Companies which will have to maintain a beneficial ownership register please see here.
In addition to being published here, this information was sent to Harneys' Cayman clients on 8 May 2017.