The requirements for filing of beneficial ownership information for Cayman Islands companies will change with effect from 15 May 2020 in two respects due to international requirements. These changes are expected to affect a relatively small number of companies.
Note: if you have already notified us that your company is out of scope you can ignore this (see page 6 of https://www.campbellslegal.com/ubo/explanatory-notes.pdf as to which companies are out of scope).
Please review the summary at 1 and 2 below to determine whether your company is affected and, if so, complete and return to us the relevant form.
(1) The threshold for an individual to be recorded as a beneficial owner has been reduced from more than 25% to 25% or more.
The relevant definition now reads:
An individual (“X”) is a beneficial owner of a company (“company Y”) if the individual meets one or more of the following conditions in relation to the company—
(a) X must hold, directly or indirectly, 25% or more of the shares in company Y;
(b) X must hold, directly or indirectly, 25% or more of the voting rights in company Y;
(c) X must hold the right, directly or indirectly, to appoint or remove a majority of the board of directors of company Y.
This means that someone who holds, directly or indirectly, 25% (exactly) or more of the shares of a Cayman Islands company is now considered a beneficial owner and a beneficial ownership report needs to be filed in respect of them. Previously, only persons who held more than 25% of the shares of a Cayman Islands company would be considered a beneficial owner.
If this change affects your company then you will need to complete and return to us form A-1 by 15 May, 2020 at the latest. This can obtained at: https://www.campbellslegal.com/ubo/form-a-1.pdf
(2) The second change is in relation to entities that are “out of scope” of the beneficial ownership reporting requirements because they are subsidiaries of an “out of scope” parent. The threshold to qualify as a subsidiary has been reduced from more than 75% to 75% (exactly) or more and the definition of subsidiary now reads:
For the purposes of this section, a company (“company S”) is a subsidiary of one or more [out of scope] legal entities if—
(a) such legal entities, separately or collectively, hold 75% or more of the shares or voting rights in company S;
(b) each such legal entity is a member of company S and, separately or collectively, such legal entities have the right to appoint or remove a majority of its board of directors; or
(c) it is a subsidiary of one or more legal entities each of which is itself a subsidiary of one or more legal entities described in subsection (1).
If this change affects your company then you will need to complete and return to us Form C-1 by 15 May, 2020 at the latest. This can obtained at: https://www.campbellslegal.com/ubo/form-c-1.pdf
Further information on the requirements for filing of beneficial ownership information can be found at https://www.campbellslegal.com/ubo-law/ .
If you have not already complied with Beneficial Ownership reporting requirements then we urge you to do so now as failure to do so means that:
- The company will not be able to obtain a certificate of good standing;
- The company’s shareholders may not transfer any of their shares or exercise any rights attaching to their shares in the Company; and
- The Company and its shareholders could be subject to a fine of between US$30,488 and US$60,976 and it is liable to be struck off the Register of Companies.
Important note: Going forward you must notify us within 21 days of any changes (including previously unreported changes, if any) in the:
- Directors of your company and any of its parent entities
- Shareholders of your company and any of its parent entities
- Beneficial Owners of your company and any of its parent entities
Such changes may not be effective until notified to us and recorded in the relevant company’s records. Furthermore, failure to do so may result in late filing and other penalties or sanctions.
If you need any assistance with completing the necessary beneficial ownership forms or if you have questions please email us at Regulation@campbellslegal.com and we will be pleased to assist at our usual hourly rates.