Limited Companies - Ownership Information
Information contained on these pages references Guernsey legislation for Registry products and services. Further details and information regarding the requirements of other Bailiwick legislation can be found on the Guernsey Financial Services Commission website http://www.gfsc.gg/FCA/Pages/Handbook-and-Regulations.aspx
Beneficial Ownership - Who really owns a legal entity?
(n.b a glossary of terms is available at the end of this document)
The Beneficial Ownership Regime as it applies to Companies.
The term 'beneficial ownership' is used to refer to the ultimate person or group of persons who gain benefits from the activities/profits/income of a legal entity, i.e. a person who enjoys the possession/benefits of ownership, even if the ownership/title appears to be in the name of another (a nominee).
The Companies (Guernsey) Law, 2008 has specific sections dealing with beneficial ownership and is the mechanism used in Guernsey to address the relevant FATF (see glossary) recommendations. Sections 483 to 491 (inclusive) are the relevant sections.
The Law provides a general requirement for all Guernsey registered companies to have a resident agent (it is the obligation of the resident agent to ascertain who the beneficial owner is), who is either an individual, resident in Guernsey and is a director of the company, or a Corporate Services Provider (see glossary) [Section 484]. Where a company has more than one locally resident director, some or all of them may be resident agents and their functions and liabilities will be joint and several. In the case of an incorporated cell company (ICC), the resident agent of the ICC will be deemed to be the resident agent of the underlying incorporated cells.
A company which fails to comply with these requirements will be guilty of an offence. [Section 484(4)].
In addition failure to comply renders a company liable to be struck off the Register in accordance to Part XX Section 355(1)(d).
However, the Law has provided certain exemptions from the above requirements, [Section 483]. Companies which are listed on a stock exchange recognised by the Registrar [1], open-ended and closed-ended investment companies and any other class or description of company as prescribed by the Commerce and Employment Department by regulation [2].
Record of the Resident Agent
Section 485(1) requires a company to keep a record of who its resident agent is. This record shall be, in the case of a director his name; and in the case of a CSP the CSP's name and its address. Any change in the resident agent, or a change of details relating to the resident agent must be filed with the Registrar within 14 days of the date of the change.
Again, failure to comply with these provisions amount to an offence, with the company being liable to a civil penalty.
Duties of the Resident Agent
Section 486 of the Law requires the resident agent to take reasonable steps to ascertain the identity of the persons who are the beneficial owners of the members interests in that company.
Where the resident agent has ascertained that a member (a person holding shares in the company) of a company is not the beneficial owner of those shares, he shall keep a record of the true beneficial owner of those shares (the required details), in the 'record of beneficial owners'.
For the purposes of section 487 of the Law, where a resident agent has ascertained, in accordance with section 486, that a member of a company is not a beneficial owner of that member's interest, the resident agent is exempt from the requirement to keep a record of the required details of the beneficial owner in respect of that member in the record of beneficial owners where that member holds less than 10% of the total voting rights of all the members of the company having a right to vote at general meetings.
[Note: Where a member of a company is the legal and beneficial owner of the shares, the resident agent is not required to keep a record of that member in the record of beneficial owners; however the member details must be retained in the register of members as per section 123 of the Law].
The record of beneficial owners must be kept at the company's registered office. The required details are;
· In the case of an individual his name, usual residential address, nationality and date of birth.
· In the case of a legal entity or overseas legal entity its corporate/firm name, registered office, legal form and the law by which it is governed, and if applicable the register in which it is entered and its registration number in that register.
· In respect of a class of beneficial owners of such a size that it is not reasonably practicable to identify each member of the class, information sufficient to identify and describe the class of individuals who are beneficial owners.
The resident agent may give notice to a member requiring the member to disclose if they are holding the interest in the company for their own benefit or that of a another person. In the later case the resident agent may require the member to disclose the required details of that person. A member, who fails, without reasonable excuse, to comply with the notice, within such reasonable time as may be specified in the notice, OR, who makes a false statement in response to a notice which is false, deceptive or misleading in a material particular, shall be guilty of an offence. [Section 488 of the Law]
Disclosure of Beneficial Ownership Information by the Resident Agent
The resident agent shall, upon receipt of a certificate signed by any of the following:
· Her Majesty's Procureur,
· the Director General of the GFSC,
· the Chief Officer of Police, or
· the Chief Officer of Customs
(or any person appointed by any of them for that purpose)
disclose, to her Majesty's Procureur, the GFSC, a police officer or a customs officer, any information required by that person which the resident agent is required to hold by virtue of his obligations under the Law, and any other information he holds in respect of the beneficial ownership of the company. [Section 490 of the Law]
A resident agent who, without reasonable excuse, fails to comply, or makes a statement which is false, deceptive or misleading in a material particular, in response to a certificate, is guilty of an offence.
A resident agent is also guilty of an offence (Tipping Off) if he knows, or suspects that a certificate has been issued or is proposed to be issued, and he discloses to any person information, or any other matter, which are connected with the issue of that certificate which may prejudice;
- any criminal or regulatory investigation which is or may be carried out, whether in Guernsey or elsewhere, or
- any criminal or regulatory proceedings which have been or may be initiated, whether in Guernsey or elsewhere. [section 491]
The FATF 40 Recommendations
The FATF have put forward a series of 40 Recommendations (The Recommendations) that function as a comprehensive and consistent framework of measures with the objective of combating money laundering and terrorist financing.
Countries are encouraged to implement the recommendations, although it is recognised that Countries will have diverse and varying legal, administrative and operations frameworks for managing their financial systems. Accordingly the recommendations act as a set of minimum international standards for Countries to implement via measures adapted to suit their particular regimes and circumstances.
The recommendations address a number of measures and topics. For the purposes of the Guernsey Registry the significant recommendations relate to enhancing transparency and the availability of beneficial ownership information relating to the legal entities administered through the Guernsey Registry.
Glossary of Terms
Beneficial Ownership - The term 'beneficial ownership' is used to refer to the ultimate person or group of persons who gain benefits from the activities/profits/income of a legal entity, i.e. a person who enjoys the possession/benefits of ownership, even if the ownership/title appears to be in the name of another (a nominee).
Corporate Services Provider (CSP) - means a person who holds a full fiduciary licence, issued by the GFSC, within the meaning of the Regulation of Fiduciaries, Administration Businesses and Company Directors, etc (Bailiwick of Guernsey) Law, 2000.
FATF - The Financial Action Task Force - an inter-governmental body to set standards and to promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and the financing of proliferation, and other related threats to the integrity of the international financial system. (FATF/OECD February 2012)
Guernsey Financial Services Commission (GFSC) - is the regulatory body for the finance sector in the Bailiwick of Guernsey. The Commission's primary objective is to regulate and supervise financial services in Guernsey.
Legal Entities - These include Companies, Foundations, Limited Partnerships, and Limited Liability Partnerships.
Resident Agent - The person responsible for ascertaining the identity of the beneficial owners of a company.
[1] The Companies (Recognised Stock Exchanges) Regulations 2009 recognises any regulated market as per the European Directive on Markets in Financial Instruments 2004/39/EU, Channel Islands Securities Exchange, AIM, Specialist Funds Market, Australian Stock Exchange, NY Stock Exchange, NASDAQ, Cayman Islands Stock Exchange, Bermuda Stock Exchange, Hong Kong Stock Exchange, Johannesburg Stock Exchange and the SIX Swiss Exchange.
[2] The Companies (Beneficial Ownership) Regulations, 2008 exempts any subsidiary of a company listed on a stock exchange recognised by the Registrar, open-ended and closed-ended investments companies. Supervised companies within the meaning of section 530 of the Law and States trading companies within the meaning of section 540 of the Law are also exempt.
