In August 2017 the Beneficial Ownership of Legal Persons (Guernsey) Law, 2017 came into force.
The legislation requires that the resident agent of a Guernsey company submits to the Guernsey Registry a declaration of beneficial ownership before 28 February 2018. Companies will be unable to file their annual validation until the declaration has been submitted. Companies that fail to submit the declaration will ultimately be struck off. Limited liability partnerships and foundations must register their beneficial ownership details by 31 October 2017.
1. Access to the Register of Beneficial ownership
1.1 Some jurisdictions, including the UK, consider that a publicly available register should be adopted. However, Guernsey’s approach is that open accessibility would not allow the government to guarantee the security of information held and would not be compliant with data protection legislation.
1.2 Consequently access to the register in Guernsey has been restricted to “designated persons” in Guernsey’s law enforcement authorities and the Guernsey Financial Services Commission (GFSC) for the purposes of their respective criminal justice and supervisory functions. Gateways have also been established to allow the sharing of beneficial ownership information with other Guernsey entities such as the Guernsey tax authorities and other foreign authorities for the same purposes.
1.3 These purposes include the prevention, investigation or prosecution of crime, civil forfeiture investigation or proceedings, the exercise of regulatory functions and the functions of intelligence services, tax authorities and authorities with responsibility for measures in relation to international sanctions.
2. Definition of “legal persons”
2.1 The register will maintain beneficial ownership information in relation to the following:
i. Companies incorporated under the Companies (Guernsey) Law, 2008
ii. Foundations created under the Foundations (Guernsey) Law, 2012
iii. Limited partnerships with legal personality formed under the Limited Partnerships
(Guernsey) Law, 1995
iv. Limited liability partnerships established under the Limited Liability Partnerships
(Guernsey) Law, 2013.
There are exemptions for funds regulated by the Guernsey Financial Services Commission, companies listed on a recognised stock exchange and States trading companies.
3. Administration of the Register
3.1 In view of the close alignment of the functions of the register of legal persons and the register of beneficial ownership, it was considered appropriate that the Registrar of Companies be appointed to administer the new register. To avoid duplication in respect of information obtained by the GFSC, the GFSC and Registrar have been given information sharing powers.
4. Resident Agents
4.1 The beneficial ownership obligations of Guernsey Resident Agents have been enhanced and extended to include the maintenance of a record of beneficial owners. This includes recording the name, nationality, date of birth, principal residential address, date the person became the beneficial owner and the grounds on which the person is considered to be the beneficial owner. If no beneficial owner has been identified, a statement must be provided to this effect.
4.2 Resident Agents are required to verify this information (although this is already an obligation under AML/CFT regulation). Resident Agents are also required to provide this information to the Registrar together with a statement confirming that the information has been verified.
4.3 Resident Agents are required to notify the Registrar of any changes to the information maintained on the Register within fourteen days. Where a registered agent fails to provide notification, the Registrar has powers to issue compliance notices, warnings and impose administrative financial penalties and to disqualify persons from acting as resident agents.
4.4 It should be noted that under the Companies Law and the Limited Liability Partnerships Law, Guernsey companies and limited liability partnerships must appoint a resident agent. This will be either a corporate service provider licensed by the GFSC or a locally resident official. For a company, a locally resident official will be a director and for a limited liability partnership, a member. A record of the resident agent must be provided to the Registrar.
4.5 For companies where the resident agent is likely to be a company official, then this may involve additional information gathering. For companies where the company service provider is the resident agent, this information should already be held.
5. The definition of a “Beneficial Owner”
5.1 For the purposes of the Register, a beneficial owner is defined as an individual (ie a natural person). In the case of companies, this will apply to individuals who hold, either directly or indirectly through a chain of ownership, more than 25% of the shares or voting rights in a company or the right to appoint or remove the majority of its directors, as well as individuals who might otherwise control the company.
5.2 Where shares are held either jointly or individually by a number of associated persons, eg by members of the same family, or persons who have entered into an arrangement to exercise their rights jointly, each person will be treated as holding the combined shares or rights of them all.
5.3 Specific requirements have also been introduced in respect of nominee arrangements. Where a person holds shares for another person as a nominee, that other person is to be regarded as holding the shares, not the nominee.