Beneficial Ownership Act 2017
Background to the legislation
The Act repeals the Companies (Beneficial Ownership) Act 2012 and places all Isle of Man corporate and legal entities under the same legislation regarding beneficial ownership.
The Beneficial Ownership Act was given Royal Assent in April and the central database will go live on 1 July 2017. Guidance issued by the Financial Services Authority will be laid before the June sitting of Tynwald.
The Isle of Man prides itself of being responsive to international needs whilst maintaining a business-centric approach. The legislation was developed in line with the Isle of Man Government’s commitment, made to the United Kingdom last year, to enhance agreements for the sharing of information about the beneficial ownership of corporate and legal entities.
What is beneficial ownership?
Most people looking at a shareholder list on a company file will assume that the shareholder as the legal owner of the shares actually owns the shares recorded against their name and that they will be the person receiving any dividend or share of the profits. This is not always the case; sometimes the actual or beneficial owner will appoint a nominee to hold the shares in their name. This is entirely legal and may be simply a personal preference for not wanting others to be aware of the owner’s investment decisions.
In the Act, 'beneficial owner' means the natural person who ultimately owns or controls a legal entity to which the Act applies, in whole or in part, through direct or indirect ownership or control of shares or voting rights or other ownership interest in that entity, or who exercises control via other means, and 'beneficial ownership' is to be construed accordingly (whether or not this is the name recorded in the legal entity’s share register).
The Act defines any beneficial owner who owns or controls more than 25% of the beneficial ownership of a legal entity to which this Act applies as a 'registrable beneficial owner' and the required details of any registrable beneficial owner must be submitted electronically to the Isle of Man Database of Beneficial Ownership by the nominated officer/CSP.
Requirement to have a nominated officer
The Act requires every legal entity (to which it applies) to appoint a 'nominated officer' unless the legal entity is in receipt of corporate services comprising Class 4 regulated activity provided by a CSP, who may undertake the role or responsibility for which a nominated officer is responsible.
The nominated officer must be a natural person who is resident on the Isle of Man. The Act contains a savings provision that allows the nominated officer appointed under the repealed Companies (Beneficial Ownership) Act 2012 to continue to be the nominated officer under the 2017 Act, subject to the legal entity having written confirmation of the nominated officer’s consent to the continuation of their appointment.
There is a statutory obligation on the legal owners to provide the nominated officer with details of the beneficial owner of the shares if it is not them. There is also a duty on the beneficial owners and intermediate owners to assist the legal owner to ascertain the beneficial owner. Failure to meet these obligations is an offence under the Act.
The nominated officer needs to be informed of the 'required details' (name, usual residential address, a service address where it differs from the residential address, nationality, date of birth, date on which the interest in the legal entity was acquired and the nature and extent (expressed as a percentage) of the interest in the legal entity) for every beneficial owner of a legal entity to which the Act applies. The nominated officer/CSP must be notified of any changes to these details within one calendar month of the occurrence of the change.
Any changes to the nominated officer/CSP must be notified to Companies Registry within one calendar month of the occurrence of the change using the ‘Form NO/CSP ’.
Duty of the Nominated Officer/CSP
Where any beneficial owner holds more than 25% of the beneficial ownership of a legal entity to which this Act applies, that person is a registrable beneficial owner and the nominated officer/CSP must submit the required details of each registrable beneficial owner to the Department to be held in the Isle of Man Database of Beneficial Ownership.
How is the information to be submitted?
The Act states that the registrable beneficial ownership information must be submitted online, directly to the Isle of Man Database of Beneficial Ownership, by the nominated officer/CSP.
How do I access the Isle of Man database of Beneficial Ownership?
The Database is restricted and can only be accessed through Online Services. Companies Registry will issue an enrolment code by post to the nominated officer or CSP. Nominated officers will receive one letter for each appointment, multiple companies can then be added to the nominated officer's OneMann account. CSPs will receive a single enrolment code that will return a list of all their legal entities. All nominated officers and CSPs have until 1 August 2017 to enrol on the database.
When does the information have to be submitted?
The nominated officer must submit the registrable beneficial ownership information by the date on which the legal entity’s next annual return must be filed or by 30 June 2018, whichever is earlier, but in any event as soon as reasonably practicable after the information has been submitted to the nominated officer/CSP. Any changes to the information must then be submitted to the database within one calendar month of the nominated officer being made aware of the said changes.
Each time the nominated officer updates the information in the database they will be required to confirm that the information submitted is a true record of the required details of registrable beneficial ownership that has been provided to them as nominated officer/CSP.
If no changes occur during a year the nominated officer/CSP is still required to visit the Database at least once a year to confirm that the information held is both current and correct. A statement of compliance relating to this will also be contained in the annual return form.
What if there are no registrable beneficial owners?
The nominated officer/CSP is still required to visit the Database at least once a year (on the annual return date) and confirm that there are no registrable beneficial owners for the legal entity and that the information held is both current and correct. A statement of compliance relating to this will also be contained in the annual return form.
The Exchange of Notes between the Government of the United Kingdom and the Government of the Isle of Man in respect of the sharing of beneficial ownership information is available
SUBJECT TO TYNWALD APPROVAL - Beneficial Ownership (Nominated Officer Exemption)(CSP) Order 2017 – THIS IS FOR INFORMATION PURPOSES ONLY
SUBJECT TO TYNWALD APPROVAL – Beneficial Ownership (Exemption)(Collective Investment Schemes) Order 2017 – THIS IS FOR INFORMATION PURPOSES ONLY