CAYMAN ISLANDS Law and Practice Contributed by: Simon Thomas, Richard Spencer, Alexandra Clynes and Sayak Bhattacharya, Campbells
ee co-investment tranches and employee co- investment vehicles. Venture capital portfolio companies will not offer shares to the public unless participating in an IPO (in which case the relevant listing rules and obligations will apply). Shares may not be offered to the general public in the Cayman Islands. 7.2 Restrictions The Cayman Islands does not have a general foreign direct investment regime and there are no restrictions on foreign ownership of land or real estate in the Islands. Specific rules apply to foreign ownership and control of local businesses. The Local Compa - nies (Control) Act (as revised) typically requires that 60% of the ownership interests in the local business be held/controlled by Caymanians. Furthermore it will be necessary to apply for a trade and business licence. Such restrictions do not apply to Cayman Islands-based entities that conduct business exterior to the Cayman Islands. Investments into locally licensed and regulat - ed businesses are subject to approval by the Cayman Islands Monetary Authority, including ensuring that any such persons are fit and prop - er to make such investment. There are currently no foreign exchange controls or foreign exchange regulations.
Recent updates to the Beneficial Ownership Transparency Act broadly mean that certain indi - viduals or entities who own or control (directly or indirectly) 25% or more of the issued share capital in a Cayman Islands entity, exercise ulti - mate effective control over the management of such entity or exercise control through other means will need to provide certain information for inclusion in that company’s beneficial owner - ship register. The information can include per - sonal information such as full name, birth date and nationalities, but does not become publicly available (save that access may be granted to members of the public, who can evidence a “legitimate interest” to access beneficial own - ership information for a specific legal person where evidence is provided that the specific legal person is linked to money laundering or terrorist financing). In certain circumstances, where one or more ulti - mate beneficial owners cannot be identified, the company may elect to record a senior managing official (ie, a director) as the beneficial owner or take another alternative route to compliance to the extent available. The economic substance regime also provides that, where Cayman Islands companies are conducting certain relevant activities, they must annually report their relevant income generated by that activity and satisfy an “economic sub- stance test” , proving that they have adequate physical presence within the Islands. Invest - ment funds are excluded from the economic substance regime.
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