Should Your Beneficial Ownership Be Everyone’s Business?
In 2017, the Cayman Islands (“the Islands”) amended their laws to establish beneficial ownership registers for companies incorporated within the Islands. These registers would identify individuals who hold, directly or indirectly, more than 25% of the shares or voting rights in the company; and / or individuals who have the right, directly or indirectly, to appoint or remove a majority of the board of directors of the company.
If an individual has the absolute and unconditional legal right to exercise, or in fact exercises, significant influence or control over the company through the ownership structure or interests described above, that individual is deemed to be the beneficial owner.
These registers are filed with the relevant authority, and at present, are only accessible by the Minister charged with responsibility for Financial Services or a person designated by him.
The UK Forcing Our Hand
On 1 May 2018, the UK Government passed an amendment to the Sanctions and Anti-Money Laundering Bill put before the House of Commons. This amendment will have the effect of requiring all British Overseas Territories via Order in Council, the Cayman Islands being no exception, to institute a public register of all beneficial ownership information in the territory by the end of 2020. This effort by the United Kingdom to create greater global transparency would allow the ownership interests of companies registered in the Islands to be accessed by virtually anyone, anywhere.
This requirement has brought many questions and concerns along with it, not least of which is the territories’ constitutional autonomy, with the Island’s Premier calling it “a gross affront to the constitutional relationship we currently have with the United Kingdom”. The Cayman Islands Government released a statement in which they have said that a legal challenge to “the amendment which violates accepted and conventional constitutional relationships between the UK and the Cayman Islands”, remains on the table.
There is also concern that the requirement for public access to such information would compromise the protection of commercial and personally sensitive and confidential information. For instance, information will be available to competitors, and may potentially impact future dealings. It seems likely that individuals affected by the change may argue that it amounts to an unjustified breach of the right to privacy enshrined in the Islands’ constitution.
For more information, contact Allyson Speirs.
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.
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