As of 23 March 2018 all Bermuda companies and limited liability companies (LLC), except those that are expressly exempted from the requirement, must establish and maintain a beneficial ownership register at their registered offices (or, with the Registrar of Companies’ permission, a place in Bermuda convenient for inspection by the Registrar of Companies). The law provides for a transition period of six months, meaning that such entities have until 23 September 2018 to comply.
Entities that are exempted from the requirement to establish and maintain a beneficial ownership register include those whose shares are listed on the Bermuda Stock Exchange, or other appointed stock exchange; certain financial institutions (including those licensed under Sections 4 or 10 of the Insurance Act 1978 (insurers, insurance managers and intermediaries)); permit companies and certain entities operating close-ended investment funds.
The beneficial ownership register must include minimum required information in respect of every registrable person. A registrable person means a beneficial owner or relevant legal entity.
A beneficial owner is an individual (or individuals) who owns or controls more than 25% of the shares, voting rights or interests in a company through direct or indirect ownership or, failing that, an individual who has control over the company or LLC as applicable by other means. Where neither applies, the individual who holds the position of senior manager of the company or LLC as applicable is considered to be the beneficial owner. The key is to note that the threshold of share ownership is more than 25%, not at 25%.
A relevant legal entity is any legal entity or legal arrangement that would be a beneficial owner if it were an individual.
This information must also be filed with the Bermuda Monetary Authority but is not publically available.
Similar obligations have been placed on Bermuda partnerships, exempted partnerships and limited partnership as of 23 March 2018. Again, the law provides for a transition period of six months, meaning that such entities have until 23 September 2018 to comply.
British Virgin Islands
The BVI beneficial ownership registration regime applies to companies incorporated or registered under the BVI Business Companies Act, 2004; but not foreign companies registered in BVI. The definition of a beneficial owner is similar to that in relation to Bermuda with an ownership threshold of more than 25%.
If a company is in scope and not exempted, it is required to identify its beneficial owners and registrable legal entities, and provide prescribed information on them to the registered agent (RA). The RA is required to maintain the information required under the Beneficial Ownership Secure Search System Act, 2017 (BOSS Act) in the RA’s dedicated database for at least five years (a) following the dissolution of the company; or (b) after the company ceases to be a “corporate and legal entity” within the meaning of the BOSS Act.
The “Beneficial Ownership Secure Search” system is not public. It is accessible only by a “designated person” (to be designated by Order of the Minister responsible for Finance).
Cayman companies, segregated portfolio companies and limited liability companies that are not exempted from the registration regime are required to maintain a register of beneficial ownership. This register is maintained at the registered office, and its contents are regularly copied to a secure centralised technological platform. The definition of a beneficial owner is broadly similar to that of Bermuda and the BVI.
Entities that are listed on the Cayman Islands Stock Exchange or on an approved stock exchange are exempted, as are companies registered or licensed under a regulatory law (e.g. regulated funds under the Mutual Funds Law). In addition, certain companies which are managed, arranged, administered or promoted by an entity that is regulated or listed in Cayman or an approved jurisdiction, where the company is a special purpose company, a private equity or collective investment scheme or an investment fund (or the fund’s general partner where it is an exempted limited partnership) are also exempt.
As a result of amendments passed in December, 2017, any company that claims an exemption from the regime must provide its corporate service provider with written confirmation of the exemption.
The centralised technological platform was rolled out on 1 July 2017 but a grace period of one year was provided to allow companies to complete their registers. The grace period expires on 30 June 2018. Out-of-scope companies also have the same deadline to file their exemption form.
The platform is not public. It is accessible only by the competent authority, being the Minister charged with responsibility for Financial Services, either acting alone or through a person designated by the Minister to act for a specific purpose.
Watch this space
Developments around the beneficial ownership registration regimes in these offshore jurisdictions clearly are of significant importance in Asia. Note however, that companies listed on the Hong Kong stock exchange are currently exempt from such requirements.
On 23 May 2018, Royal assent was given to the UK’s Sanctions and Anti-Money Laundering Act, 2018, which requires the British Overseas Territories (but not the Crown Dependencies) to make their beneficial owner registries public by the end of 2020. It remains to be seen what steps the British Overseas Territories such as Bermuda, Cayman and the BVI will take in response to this unprecedented action.