Cayman Islands Beneficial Ownership and Enforcement of Fines
29 October 2020
The Companies (Amendment) (No.2) Law, 2020 enabled the Registrar of Companies to impose administrative fines for certain breaches of the beneficial ownership regime relating to Cayman Islands companies. Guidance, effective from October 2020, has now been released in the form of a Beneficial Ownership Enforcement Manual (the "Manual").
According to the Manual, in determining whether to impose a fine, the Registrar should take into consideration:
- Whether a breach has occurred and the nature of the breach;
- The explanation provided by the natural person, service provider or company as a result of a warning notice issued by the Registrar; and
- Any other factor relevant to the case.
The Manual further states that the Registrar:
- Will consider whether a breach has occurred on the balance of probabilities;
- Will consult with law enforcement and the prosecuting authority where there is a suspicion that the breach is of a criminal nature (a fine does not preclude prosecution);
- Will value voluntary disclosure on a timely basis; and
- May issue a warning notice giving an opportunity to remedy the breach identified within a specified time.
As a reminder of the fines regime:
- In force since 29 June 2020;
- Initial fine for a breach of US$6,100;
- If the breach continues, US$1,200 per month up to a maximum of US$30,000; and
- The Registrar has power to strike off the company if a fine remains unpaid for 90 days.