Briefing: Beneficial ownership register

Posted: 13/09/2017

StuartTyler_BabbeBabbé Partner Stuart Tyler (pictured right) and Senior Associate Chris Dye (below) have issued a briefing note on the new Register of Beneficial Ownership

On 15 August, the Beneficial Ownership of Legal Persons (Guernsey) Law, 2017 and its regulations came into force. It establishes a Register of Beneficial Ownership of Legal Persons and empowers its registrar to maintain the register and enforce compliance with the beneficial ownership law.

‘Legal persons’ are defined as Guernsey-registered companies, limited liability partnerships and foundations. However, companies listed on recognised stock exchanges and funds regulated by the Guernsey Financial Services Commission (GFSC) are exempt from the new rules.

The bulk of the responsibility for updating the register falls to the resident agents of Guernsey legal persons. Prior to the beneficial ownership law, the resident agent was required to take reasonable steps to ascertain the identity of the beneficial owners of a company and, where the registered members were not the beneficial owners, to record legally prescribed information about the beneficial owners at the registered office. These obligations expanded in the new law.

ChrisDye_BabbeRequirements of the new law

The law requires the resident agent to collect the name, nationality, birth date and principal residential address of beneficial owners and the grounds on which they are considered to be beneficial owners. 

If a person becomes a beneficial owner after the date on which the beneficial ownership law takes effect, the resident agent must also record the date on which he or she became beneficial owner.

The resident agent is required to take reasonable steps to ascertain the beneficial ownership of the legal person. This includes a requirement that the registered agent notify persons that the agent has reasonable grounds to believe may be a beneficial owner, requiring him or her to confirm whether this is the case and to confirm, correct or complete the information required to be collected by law. 

The resident agent must also serve notices if he or she has reasonable cause to believe that there have been changes in the beneficial ownership information of which he or she has not been informed. Resident agents may also send notices to persons who they suspect may know the identity of the beneficial owners.

Beneficial owner of a legal person

Determining the ‘beneficial owner’ of a legal person may require several steps. The first step is to identify the individual(s) who control the legal person through direct or indirect ownership. Those who ultimately hold 25% per cent or fewer shares or voting rights of a company will not be considered to be controlling the company through ownership unless they have the right to appoint the majority of directors of the company. 

Where a legal person is controlled through ownership by a company listed on a recognised stock exchange, a States trading company, or a company, LLP or foundation registered in Guernsey, that entity is considered the beneficial owner for the purpose of the beneficial ownership law. The regulations under the law provide for additional rules on determining beneficial ownership where the legal person is owned by a trust.

If no individual exists, or none can be identified as controlling the legal person through ownership, then those individuals who control the legal person through other means will be considered the beneficial owner. 

If no such individual exists or can be identified, the individual with the position of a senior managing official may be deemed to be the beneficial owner. Where an individual is identified as controlling the legal person through ownership, but there are reasonable grounds to believe that another individual controls the legal person through other means, they are both considered to be beneficial owners for the purposes of the law.

Access to information

Beneficial ownership information will not be publicly accessible and registered agents will not be allowed to disclose such information except as required by law. The information will generally be available to law enforcement officials and the GFSC and may be subject to information exchange agreements with other jurisdictions.

Resident agents may be subject to criminal sanctions and/or civil penalties levied by the registrar or the GFSC for failing to fulfil their duties under the Beneficial Ownership Law. Others may be subject to civil penalties for failing to respond within 21 days to notices from resident agents requesting beneficial ownership details. Providing information to the registrar which a person knows or has reasonable cause to believe is false, deceptive or misleading may lead to criminal penalties.

All limited liability partnerships and foundations existing when the beneficial ownership law came into effect must populate the register with their beneficial ownership details by 31 October 2017, while existing companies must do so by 28 February 2018. 

Effective since 15 August 2017, new legal persons are required to provide beneficial ownership details upon registration of the legal person at the Guernsey Registry. A form and guidance for filing information in the Register is available on the Guernsey Registry website at www.guernseyregistry.com.


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