Changes to the Cayman Islands beneficial ownership regime

Introduction

The Beneficial Ownership Transparency Act, 2023, associated regulations and guidance (together the “Act” and the “New BOR Legislation”) were brought into force on 31 July 2024 (the “Commencement Date”) with enforcement relating to the new requirements under the Act commencing on 1 January 2025.

Background

Our advisory published on 20 April 2017 sets out in detail the beneficial ownership regime in the Cayman Islands (the “BOR”) that applied before the Commencement Date.

Key Changes to the BOR

The following substantial changes have now been made to the Cayman Islands BOR as a result of the New BOR Legislation:

In Scope Entities

Cayman Islands companies, limited liability companies, limited liability partnerships and foundation companies continue to be in scope for the purposes of the BOR. For the first time, the New BOR Legislation has now brought into scope exempted limited partnerships (commonly used as closed-ended funds) and limited partnerships (together “Legal Persons”). Trusts and registered foreign companies continue to fall out of scope of the BOR.

In addition, entities such as general partners, subsidiaries of regulated entities, entities registered under the Securities Investment Business Act or the Virtual Asset Service Providers Act that were previously exempt from the BOR will now need to identify their registrable beneficial owners (“RBOs”) and provide details of their RBOs to their corporate services provider (“CSP”), save for those entities permitted to utilise the Alternative Compliance Route (as defined below).

Registrable Beneficial Owners

A RBO in relation to a Legal Person means an individual Beneficial Owner or a Reportable Legal Entity (“RLE”).

Individual RBO

The Act defines a “Beneficial Owner” as an individual who meets any of the following specified conditions:

the individual ultimately owns or controls, whether through direct or indirect ownership or control, twenty-five per cent or more of the shares, voting rights or partnership interests in the Legal Person;
the individual otherwise exercises ultimate effective control over the management of the Legal Person; or
the individual is identified as exercising control of the Legal Person through other means.

Where an individual operates solely in the capacity of a “Professional Advisor” (which includes a lawyer, accountant, professional advisor or a financial advisor who provides advice or direction in a professional capacity) or a “Professional Manager” (which includes a liquidator, receiver or restructuring officer who exercises a statutory function), such individual will not be considered to meet the definition of a Beneficial Owner under the Act.

The Act also considers the following persons as individuals:

a corporation sole;
a government or government department of a country or territory or a part of a country or territory;
an international organisation whose members include two or more countries or territories (or their governments); and
a public authority.

Trustees

Where no individual meets any of the definitions of a Beneficial Owner but the trustees of a trust meets one of the definitions of a Beneficial Owner, the trustees of the trust will be the Beneficial Owners of the Legal Person if they have ultimate effective control over the activities of the trust other than solely in the capacity of a Professional Advisor or a Professional Manager.

Senior Managing Official

If no individual meets the definition of a Beneficial Owner, the Act provides that a Legal Person’s “Senior Managing Official” (“SMO”) will be identified as the contact person. A Senior Managing Official includes (for the first time under the BOR) a director or a chief executive officer of the Legal Person and guidance provides further clarity on who to identify as a SMO in this respect.

Reportable Legal Entity

A reportable legal entity or “RLE” in relation to a Legal Person means another Legal Person (other than a foreign company, foreign entity or a foreign limited partnership) that if it were an individual would be a beneficial owner of the first mentioned legal person.

It is not necessary for a Legal Person to report individual beneficial owners of a RLE since that entity will itself have its own reporting obligations under the New BOR Legislation.

Alternative Compliance Route

Any Legal Person:

licensed under a regulatory law [1];
listed on the Cayman Islands Stock Exchange or an approved stock exchange [2]; or
that is a subsidiary of an entity listed on the CSX or an approved stock exchange,

may provide their CSP with details of their regulatory license or listed status rather than provide details of their RBO. The Legal Person’s CSP will in turn provide this information to the Competent Authority and this process is the “Alternative Compliance Route”.

Investment Funds

Legal Persons which are registered as mutual or private funds (“Registered Funds”) with the Cayman Islands Monetary Authority (“CIMA”) may provide their CSP with details of a “contact person” rather than their RBOs. The contact person will not be required to maintain a beneficial ownership register, but must provide the Competent Authority with the requested beneficial ownership information within twenty-four hours of a request being made, or at any other time as the Competent Authority may reasonably stipulate. Campbells Corporate Services Limited can act as the contact person for its Registered Fund clients and further information is available on request.

Alternatively, Legal Persons who may otherwise avail themselves of the Alternative Compliance Route may decide to opt in to the BOR and provide details of their RBOs to their CSP.

Obligations on Legal Persons that do not benefit from the Alternative Compliance Route

Such Legal Persons must:

identify every RBO;
give written notice to those individuals or entities which have been identified as RBO’s and to any individuals or entities whom the entity reasonably believes may be a RBO. That notice requires each addressee to respond within 30 days of receipt, confirming whether the individual or entity is a RBO and, if so, to confirm or correct any of the information required to be inserted in the BOR;
establish and maintain an up to date beneficial ownership register which includes the RBOs of such Legal Person. The register must be kept at the Legal Person’s registered office and is typically maintained by the Legal Person’s CSP;
where it becomes aware that there has been a ‘relevant change’[3]to the information contained in the BOR, give notice as soon as reasonably practicable (and no later than 30 days after it becomes aware of the relevant change) to the RBO requesting confirmation of the change;
provide the required particulars of its RBOs which includes:
- in respect of individuals:
  - name;
  - address;
  - date of birth;
  - nationality(ies);
  - information from their unexpired and valid passport, driver’s license or other government issued identification document;
  - the nature in which the individual owns or exercises control of the Legal Person;
  - the date on which the individual became (or ceased to be) a RBO;
- in respect of RLEs:
  - name;
  - address of registered or principal office;
  - legal form and law by which it is governed;
  - the date on which the RLE became (or ceased to be) a RBO.

Statutory Offences and Penalties

The Act includes various offences and penalties and directors, managers, officers and partners of the Legal Person may also be liable to the same penalty as the Legal Person. The Competent Authority also has the power to impose administrative fines on any person who breaches the relevant provisions of the New BOR Legislation. The Competent Authority may strike an in-scope entity off the Register if an administrative fine remains unpaid for 90 days.

Public Accessibility

In December 2024, the Beneficial Ownership Transparency (Legitimate Interest Access) Regulations, 2024, (the “Access Regulations“) and the Beneficial Ownership Transparency (Access Restriction) Regulations, 2024, (the “Privacy Regulations“) were published. The Access Regulations come into force on 28 February 2025.

The Access Regulations set out the framework for members of the public, who can evidence a “legitimate interest”, to access beneficial ownership information for a specific legal person where evidence is provided that the specific legal person is linked to money laundering or terrorist financing.

The Access Regulations develop the framework for members of the public that are:

Engaged in journalism or bona fide academic research;
Acting on behalf of a civil society organization whose purpose includes the prevention or combating of money laundering, its predicate offences or terrorism financing;
Seeking information in the context of a potential or actual business relationship or transaction with the legal person about whom the information is sought; and
who can evidence a legitimate interest, to access beneficial ownership information for legal persons where the information being sought is for the purpose of preventing, detecting, investigating, combating or prosecuting money laundering or its predicate offences or terrorist financing.

It will be necessary for the member of the public to submit an application with supporting documentation and to pay a fee (CI$30). If the Competent Authority is satisfied with the application, it will provide the applicant with the requested information.

For individuals the following information will be accessible under the Access Regulations:

name;
country of residence;
nationality;
month or year of birth or both; and
nature of control over the entity that falls within the scope of the New BOR Legislation.

The Privacy Regulations set out the framework for individuals to apply for protection from public disclosure under the Access Regulations where they believe that their association with the legal person, if disclosed, will place them, or an individual living with them, at serious risk of kidnapping, extortion, violence, intimidation, or other similar danger or serious harm.

The applicant must be a Registered Beneficial Owner or Senior Managing Official. During the period which an application that has been made to the Competent Authority is being considered with a view to determining the application, the Competent Authority shall not disclose to any member of the public the information on the search platform which is the subject of the application. The Competent Authority will also not make available for public inspection an application made, any records or documents provided or received in support of that application or any notices in respect of the application.

Guidance on Applying for Access to Beneficial Ownership on the basis of Legitimate Interest and for the Protection from Disclosure was published by the Competent Authority on 17 December 2024 and is available here.

Next Steps

Campbells can assist with all of these aspects. Please do not hesitate to contact your usual Campbells contact if you have any questions or require any additional assistance.

[1] The definition of regulatory law includes the Banks and Trust Companies Act, the Companies Management Act, the Insurance Act, the Mutual Funds Act, the Private Funds Act, the Virtual Asset Service Providers Act and the Securities Investment Business Act, each as revised from time to time.
[2] As set out in Schedule 4 to the Cayman Islands Companies Act
[3] A relevant change occurs if:
– a RBO ceases to be a registrable beneficial owner in relation to the Legal Person; or
– any other change occurs as a result of which the ‘required particulars’ of a RBO in the Legal Person’s beneficial ownership register are incorrect, incomplete or not current.