Purpose of the Act
The Register of Beneficial Ownership Act, 2018 (the “Act”) came into force on the 20 December, 2018 as part of the Bahamian Government’s efforts to meet their international co-operation obligations. The Act provides for the establishment of a secure search system by the Attorney General of the Commonwealth of The Bahamas (“The Bahamas”) of databases managed by registered agents which hold beneficial ownership information of entities incorporated, registered, continued or otherwise established in accordance with the Companies Act or the International Business Companies Act that are managed by them. Importantly, the secure search system does not create a public Register of Beneficial Ownership.
Duty to Identify and Verify Beneficial Owners and Maintain Database
A legal entity must notify its registered agent or the Registrar General within fifteen (15) days of identifying any person as either a (i) beneficial owner or (ii) registrable legal entity.
Registered agents must take reasonable steps to verify the identity of the beneficial owners and registrable legal entities of each legal entity for which it acts as a registered agent. Registered agents are required to establish and maintain a database that is accessible by the secure system and enter into that database the following prescribed information for each legal entity on behalf of which it acts as a registered agent:
(a) with respect to each legal entity: (i) the full legal name, including alternative names; (ii) the incorporation number or its equivalent; (iii) date of incorporation; (iv) status; (v) registered address; and (vi) any other particulars as the Minister of Legal Affairs may by Order specify;
(b) with respect to each beneficial owner of the legal entity: (i) the full legal name; (ii) residential address and, if different, an address for service of notices under this Act; (iii) country of ordinary residence or domicile; (iv) date of birth; and (v) nationality information identifying the person from his passport, driver’s licence or other government-issued document including –identifying number; country of issue; and the date of issue and expiry;
(c) with respect to each registrable legal entity of the legal entity: (i) the details of the registrable legal entity as outlined in paragraph (a) above; (ii) the jurisdiction in which the registrable legal entity is formed; (iii) the basis upon which the legal entity is designated as a registrable legal entity; (iv) where the registrable legal entity is a foreign regulated person, the name of the jurisdiction of regulation and the name of the foreign regulator (v) where the registrable legal entity is a foreign state or a wholly owned subsidiary of a foreign state, the name of that foreign state and, if applicable wholly owned subsidiary; and
(d) with respect to an exempt person: (i) the details of the exempt person as outlined in paragraph (a) above and (ii) the basis upon which the exempt person is designated as an exempt person.
Where there is a change in the required particulars relating to a beneficial owner or registrable legal entity, the legal entity must notify its registered agent within fifteen (15) days of the change and the registered agent must immediately update the database to reflect this information.
Who Is a Beneficial Owner?
In summary terms, a beneficial owner is the natural person who ultimately owns or controls a legal entity. In the case of a legal person other than a legal entity whose securities are listed on a securities exchange, this will include, but is not limited to, a natural person who ultimately owns or controls, whether directly or indirectly, ten or more per cent of the shares or voting rights of the legal entity.
A person will not be treated as a beneficial owner only by reason of either (a) having the benefit of a security interest over the shares or voting rights in a legal entity or (b) having a commercial exposure to the financial performance of a legal entity pursuant to financial derivatives or a similar contractual arrangement.
Who is a Registrable Legal Entity?
A registrable legal entity is a legal person, its affiliates or wholly owned subsidiaries which (a) would be a beneficial owner of the legal entity if it were a natural person and (b) which is either an exempt person, a legal entity the securities of which are listed on a regulated securities exchange, a licensee or a foreign regulated person, or a foreign state or a wholly owned subsidiary of a foreign state.
Which Persons are Exempt From the Act?
An exempt person is (i) a legal entity whose securities are listed on a regulated stock exchange; (ii) a legal entity that is a licensee or registrant under the Bank and Trust Companies Regulation Act, the Investment Funds Act, the Securities Industry Act, the Insurance Act, the External Insurance Act and the Financial and Corporate Services Providers Act or an affiliate or wholly owned subsidiary of such licensee or registrant; or (iii) any other legal entity that the Minister of Legal Affairs may exempt by regulations.
Retention Period
Where a legal entity is dissolved, information maintained in a database in respect of that legal entity shall be maintained by the administrator, liquidator or other person involved in the dissolution of that legal entity for a further five years.
Use of Secure Search System
The only persons who will have access to the secure system are persons within the Office of the Attorney General who are designated by the Attorney General in writing (“designated persons. Designated persons must execute searches of the secure system if formally requested to do so in writing by designated officers of certain prescribed national competent authorities. A record shall be maintained of all searches conducted by designated persons.
Confidentiality
All information maintained on each database is confidential and must not be accessible by any person except –
- a designated person through the secured search system from physically secure premises using a secure information technology system; and
- the registered agent to whom the database relates.
Transitional
A legal entity incorporated or registered before the commencement of the Act and a registered agent must within a one year period from the date of commencement of the Act, meet the requirements under the Act.
H&J Corporate Services Limited requires that all legal entities in which it acts as registered agent and registered office provide updated information on its beneficial owners by 30 June, 2019.
For further information, please contact any Partner in the Commercial Transactions practice group.
The information contained in this bulletin is provided for the general interest of our readers, but is not intended to constitute legal advice. Clients and the general public are encouraged to seek specific advice on matters of concern. This bulletin can in no way serve as a substitute in such cases.
