1. Who is affected by the new regime?

Previously exempt entities are now in scope. The list of in-scope entities includes companies, limited liability companies, limited liability partnerships, foundation companies, and, for the first time, exempted limited partnerships and limited partnerships.

2. How will the changes impact entities previously exempt from beneficial ownership reporting?

Entities previously exempt must now review their status and potentially begin reporting beneficial ownership information under the new legislation and rules. In scope entities will need to ensure compliance with the new requirements, including, if relevant, updating their beneficial ownership registers and ensuring that all information is accurate and up to date. Funds registered under either the Mutual Funds Act (Revised) or the Private Funds Act (Revised) may use an alternative route to compliance, pursuant to which they can appoint a contact person who is licensed or regulated in the Cayman Islands who will be required to provide the competent authority with the requested beneficial ownership information within 24 hours of a request. The contact person is likely to be either a Cayman Islands licensed administrator or registered office provider (our strategic alliance partner, Harneys Fiduciary, will be offering contact person services to its registered office clients). The alternative route to compliance for CIMA-registered investment funds only applies to the registered mutual fund or private fund itself. There will be a number of legal persons previously exempt from reporting (ie general partners and asset holding vehicles) that will now be in scope.

3. What is the trigger to report underlying beneficial owners?

The term "beneficial owner" has been clarified to include any individual who ultimately owns or controls more than 25 per cent of the entity, either directly or indirectly. Additionally, the definition of "registrable persons" now includes corporate entities that meet specific control thresholds.

4. What are the compliance deadlines under the new regime?

The Cayman Islands Government says that the new beneficial ownership regime will not be enforced until early next year. At this time, the exact date is not clear, and additional regulations may be implemented before then. We encourage clients to start considering whether their existing operations will be impacted and how they will comply with the new regime (if applicable).

5. What are the consequences of non-compliance with the new regime?

Non-compliance may result in significant administrative fines, and entities could be subject to further regulatory scrutiny.

6. What steps should entities take to prepare for the new regime?

Entities should conduct a thorough review of their ownership structures, update their beneficial ownership information, and consult legal or compliance professionals to ensure they meet all new requirements.

7. What provisions have been made for entities with complex ownership structures?

The regime includes detailed guidance on how entities with complex or layered ownership structures should determine and report beneficial ownership, ensuring transparency at all levels.

8. Will the Beneficial Ownership registers be made available to the public?

The Beneficial Ownership Transparency Act, 2023 provides that beneficial ownership information shall only be made publicly available when regulations have been proposed by Cabinet and affirmed by a resolution of Parliament. It is expected that there will be some limited access for persons with legitimate interests in due course, subject to various safeguards.

For further guidance tailored to your specific situation, we advise you to contact the author of this Q&A or your usual Harneys contact. Our team of professionals is ready to assist you in navigating this evolving regulatory landscape and ensuring you meet all compliance obligations effectively.