CAYMAN ISLANDS Law and Practice Contributed by: Daniel Lee, Sophia Scott, Kimberly Robinson and James Turner, Maples Group
In instances where no natural person is identi - fied as a “beneficial owner”, an individual who is a ”senior managing official” of the in-scope entity, being a person such as a director, chief executive officer or another person with control or authority over the in-scope entity, will need to be named in such capacity in the entity’s benefi - cial ownership register, in order to comply with the BOT Act. The majority of the exemptions that applied under the previous regime are removed or sig - nificantly restricted by the BOT Act in favour of certain “alternative routes to compliance”. Such alternative routes mean that the Legal Person would not be required to report its beneficial owners, nor establish a beneficial ownership register, but rather report limited ”required par - ticulars”. Under the BOT Act, Legal Persons able to apply an alternative route to compliance include a Legal Person that is: (i) listed, or is a subsidiary of a listed entity, on the Cayman Islands Stock Exchange (CSX) or an approved stock exchange; (ii) licensed under a regulatory law (note this is limited to certain Cayman Islands regulatory laws); (iii) a fund registered under the Private Funds Act (As Revised) or the Mutual Funds Act (As Revised); or (iv) otherwise exempted by Cabinet (none currently). Entities falling outside categories (i)-(iv) above (or otherwise opting not to apply an alternative route to compliance) are considered “in-scope” and are required to establish and maintain a ben - eficial ownership register. The required particulars to be reported on the Legal Person’s beneficial ownership register are largely unchanged from the requirements of the previous regime with two notable exceptions,
those being that the Legal Person must also report (i) the nationality of all beneficial own - ers; and (ii) the nature in which the individual or “reportable legal entity” owns or exercises con - trol of the Legal Person (whether, for example, by ownership of economic interests or voting interests in, or as a senior managing official of, the Legal Person). Economic Substance Act (As Revised) The Cayman Islands has enacted economic substance legislation in compliance with the OECD’s Inclusive Framework on Base Erosion and Profit Shifting (BEPS). Where an entity is conducting a “relevant activity” (see below for details) in a ”relevant financial period” for the purposes of the Cayman Islands economic sub - stance regime, the entity will be required to (i) file an economic substance notification with the Registrar of Companies before 31 January each year, and (ii) file an economic substance return with the Department for International Tax Coop - eration of the Cayman Islands no later than 12 months from the last day of the entity’s financial year end. The Economic Substance Act applies economic substance requirements to the following catego - ries of geographically mobile “relevant activities” previously identified by the OECD (and adopted by the EU): • banking; • insurance; • shipping; • fund management; • financing and leasing; • headquarters; • distribution and service centres;
• holding company; and • intellectual property.
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