New Legislation in the Cayman Islands Requires Cayman Islands’ Incorporated Entities to File Beneficial Ownership Registries

Dear Clients and Friends,

On July 31, 2024, the Beneficial Ownership Transparency Act (“Act“) of the Cayman Islands came into force, and it will be enforced as of January 1, 2025.

The Act applies to all entities incorporated in the Cayman Islands, including companies and exempted limited partnerships (“Cayman Corporations“) however does not apply to entities registered as foreign entities in the Cayman Islands.

Below is an overview of the main implications of the new Act:

1. Maintaining Beneficial Ownership Register – Any Cayman Corporation is required to maintain a beneficial ownership register with its corporate service provider (i.e. its Cayman Islands registered office service provider).
2. Monthly Filing and Updates – The beneficial ownership register needs to be filed with the competent authority in the Cayman Islands (generally the Registrar of Companies) monthly, by the corporate service provider. Any change in the beneficial ownership register needs to be reported to the corporate service provider and updated with the competent authority within 30 days.
3. Who qualifies as a Beneficial Owner – The definition of a ‘beneficial owner’ includes individuals and Cayman Corporations who ultimately own or control 25% or more of the interests or voting rights in the reporting entity or which exercise ultimate effective control over the management of the reporting entity. Where no individual is identified as a beneficial owner the reporting entity needs to identify a senior managing official.
4. Which Information Needs to be Disclosed – the reporting entity needs to include in the beneficial owners’ registry certain details with respect to its beneficial owners, including identification number, nationality and the nature in which such persons exercise control over the reporting entity.
5. Alternative Route – Investment funds which are registered with the Cayman Islands Monetary Authority (“CIMA”), may take an alternative route and nominate a ‘Contact Person’ to hold the information on their beneficial owners that can be provided to the competent authority within 24 hours upon request. A Contact Person must be a licensed Cayman Islands fund administrator, a registered office services provider or other licensed service provider. Other entities within fund structures (such as general partner) cannot benefit from the alternative route.
6. Public Access: Currently, the Act does not provide public access to the beneficial ownership registrars, however this is under examination. Certain authorities within the Cayman Islands will have access to the information, including CIMA and the Cayamn Islands Tax Information Authority.
7. Enforcement: Fines of up to CI$ 100,000 and additional administrative fines may be imposed on entities which fail to comply with the Act. The beneficial owners themselves may be subject to fines and to criminal offenses if they fail to provide information to the reporting entity.

We welcome you to contact us with respect to any question you may have.

Please contact Gal Sasson for further information at Sassong@herzoglaw.co.il.

Sincerely,

Herzog Fox & Neeman

Investment Funds Team