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Beneficial Ownership Act 2017

The Act introduces a number of changes for locally incorporated and established companies; the principal objective of which is to ensure that the beneficial ownership of companies can be traced back to their ultimate beneficial owner.

Under the Act each company is required to appoint a "Nominated Officer", who must be either a natural person resident in the Isle of Man or a licensed corporate service provider, such as Cayman National Trust Company (Isle of Man) Limited. It is the role of the Nominated Officer to identify a company's beneficial owner and enter their details on a secure database maintained by the Department of Economic Development ("DED"). With effect from 1 July 2017, the Nominated Officer will be required to submit electronically to the DED details of the beneficial owner(s) as defined above. This forms part of a company's annual return and will ensure that the Island's central register of beneficial ownership will be fully populated by 30 June 2018.

In turn companies have an obligation to keep their Nominated Officer informed of any changes to their beneficial ownership and this must be done within one month of the relevant change. If the legal owner of a company fails to notify the Nominated Officer of such a change (or fails to make a beneficial owner's details available to the Nominated Officer) then the company can take enforcement action by placing restrictions on the rights attached to the legal owner's interest included in respect of voting rights, rights to further shares, rights to payments due and/or their right to assign or transfer their interests.

The identification of the beneficial ownership of companies has for many years been routine practice on the Island; forming as it does part of the due diligence process followed by all corporate service providers in order to comply with their legal and regulatory obligations in respect of anti-money laundering and the control of the financing of terrorism. The Act gives a wide definition of the beneficial owner; being a natural person who ultimately owns or controls an Isle of Man entity, in whole or in part, through direct or indirect ownership, voting rights, control of shares or other ownership interest, or who exercises control via other means. Whilst corporate service providers will identify all beneficial owners it is only those that control 25% or more of an Isle of Man entity that must be registered with the Companies Registry (as "Registrable Beneficial Owners").

With entities owned by discretionary trusts the position is less straightforward. In such cases, the reporting is normally at the trustee level and as the trustee is more often than not a company the same Registrable Beneficial Owner rules would therefore apply.

So, who can actually access the beneficial ownership register? It is not a publicly accessible register and is therefore not available for public inspection. However, a regulatory body (e.g. Isle of Man Financial Services Authority) or a competent authority (e.g. Customs and Excise or an authority where a beneficial ownership information sharing agreement is in place between the Isle of Man Government and the government of another country) can submit an information request to the Nominated Officer for a "Permitted Purpose" (as set out in the Act). The Nominated Officer must then respond within 7 days, where the request relates to a Registrable Beneficial Owner, and within one month when it relates to any other beneficial owner.

Cayman National Trust Company (Isle of Man) Limited will provide the Nominated Officer for those companies using its full corporate administration service, to ensure full compliance with the Act. It also offers the service to its Registered Office clients. If you are a client and unsure what this means for you please contact your relationship manager or email us at fiduciary@caymannational.im

Posted October 2017

About the author

Roz was born and educated in the UK and moved to the Cayman Islands in 1990 where she began her career in the trust and corporate industry.

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