The information contained in this document is marketing material and for informational purposes only. The information contained in this document is presented without any warranty or representation as to its accuracy or completeness and all implied representations or warranties of any kind are hereby disclaimed. Recipients of this document, whether clients or otherwise, should not act or refrain from acting on the basis of any information included in this document without seeking appropriate professional advice. The provision of the information contained in this document does not establish any express or implied duty or obligation between Citco and any recipient and neither Citco nor any of its shareholders, members, directors, principals or personnel shall be responsible or liable for results arising from the use or reliance of the information contained in this document including, without limitation, any loss (whether direct, indirect, in contract, tort or otherwise) arising from any decision made or action taken by any party in reliance upon the information contained in this document. © The Citco Group Limited, December 2024.
Cayman Islands – New Ultimate Beneficial Ownership Regulations Enforced
As of the 1st of January 2025, the Cayman Islands Beneficial Ownership Transparency Act 2023 (the BOT Act) is now fully enforced.
This legislation consolidates and expands on previous Ultimate Beneficial Ownership (UBO) regulation, bringing important updates for businesses operating in the jurisdiction.
Key changes:
1. Expanded Scope
The BOT Act brings new entities into scope and applies to all ‘legal persons’. Entity types now covered by the BOT Act include:
- Companies
- Limited Liability Companies (LLCs)
- Limited Liability Partnerships (LLPs)
- Limited Partnerships (LPs)
- Exempted Limited Partnerships (ELPs)
- Foundation companies
2. Updated ‘Beneficial Owner’ Definition
The definition has been amended to be more aligned with the Cayman Islands Anti-Money Laundering Regulation. A beneficial owner is an individual who:
- Owns or controls (indirectly or directly) 25% or more of shares, voting rights, or partnership interests
- Exercises ultimate effective control over management
- Or is identified as exercising control through other means
An individual operating solely in the capacity of a ‘professional advisor’ or ‘professional manager’ will not be considered a beneficial owner.
3. Reduced Exemptions to Reporting
The new BOT Act significantly reduces previous exemptions, introducing ‘alternative routes to compliance’.
Under these routes, certain entities may report limited “required particulars” instead of full beneficial ownership information, streamlining the process while maintaining transparency.
4. Public Access to Information
While the Cayman Islands currently restricts public access to beneficial ownership registers, the BOT Act has the potential to change this.
The Cabinet may, subject to resolution in Parliament, make further regulations empowering the registrar to provide public access to certain required particulars of registrable persons.
The Cayman Islands Government has also indicated that is currently progressing to provide access for those members of the public who meet a ‘legitimate interest test’.
Obligations for In-Scope Legal Entities
- In-Scope entities must appoint a licensed corporate services provider. This provider will maintain the entity’s beneficial ownership information to the Cayman Islands’ central beneficial ownership register
- Annual Filing of Beneficial Ownership information is required. This is typically included as part of Annual Return Filings.
- Any changes to the Beneficial Ownership information must be reported within one month.
The Risks of Non-Compliance
- Financial Penalties:
For initial failures to comply: Up to CI$25,000 (approximately US$30,000)
For continuing failures: Up to CI$500 (approximately US$600) per day. - Striking Off:
The Registrar of Companies may strike off a company from the register for non-compliance. - Administrative Fines:
The Registrar can impose administrative fines of up to CI$250,000 (approximately US$300,000) - Restrictions on Business:
Non-compliant entities may face restrictions on conducting business or engaging in certain transactions. - Director Liability:
Directors and officers may be held personally liable for the company’s non-compliance. - Increased Scrutiny:
Non-compliant entities may face increased regulatory scrutiny and potential audits.
As these changes take effect, it’s crucial for businesses operating in the Cayman Islands to review their structures and compliance processes.
Contact us today for expert guidance and support on navigating the Cayman Islands new UBO reporting landscape.
Or download our UBO Special Report for insights into the dynamics and nuances of managing UBO requirements around the world.
