New fines and changes to beneficial ownership responsibilities in the Cayman Islands

The Cayman Islands beneficial ownership regime has been amended and the following important changes will commence on 29 June 2020:

• New administrative fines will apply for companies that breach specified beneficial ownership provisions of the Companies Law or the Limited Liability Companies Law
• Responsibility will be placed on the registered office provider, instead of the company, with respect to restrictions notices
• Companies registered as a “Registered Person” under the Securities Investment Business Law will be exempt from the beneficial ownership requirements set out in the Companies Law or the Limited Liability Companies Law

New administrative fines

Any company that breaches specified beneficial ownership provisions of the Companies Law or the Limited Liability Companies Law, will be subject to fines under the new administrative fines provisions.

Any breach of the specified provisions will attract an initial fine of US$6,100. If the breach continues a further fine of US$1,200 per month can be imposed, up to a maximum of US$30,000.

The fines will be imposed by the Cayman Islands Registrar of Companies, and will have a limitation period of six months from the date on which the Registrar became aware of the occurrence of the breach.

The Registrar will have the power to strike the company off the Register of Companies if any fine remains unpaid for 90 days.

A fine for a breach will not preclude a prosecution for the breach or liability for any relevant fee, where the breach is also an offence.

Expansion of responsibilities for the registered office provider

The registered office provider will now be responsible for certain actions in relation to restriction notices that were once the responsibility of the company, thereby taking control away from the company for the issuance and subsequent management of a restrictions notice.

With these changes, the registered office provider, rather than the company, now has:

• The ability to issue a restrictions notice to the registrable persons whose particulars are missing
• The obligation to send a copy of any restrictions notice to the competent authority
• The ability to apply to the Grand Court to have the restrictions notice lifted
• The obligation to withdraw the restrictions notice in certain circumstances

Registered Persons exempt from beneficial ownership requirements

Those companies that are registered as Registered Persons under the Securities Investment Business Law will no longer be required to comply with the beneficial ownership obligations under the Companies Law or the Limited Liability Companies Law, as applicable.

Please see our client alert on this topic for more information specific to Registered Persons.

Please contact your usual Harneys representative if you would like further information on these changes.