The Beneficial Ownership of Legal Persons (Guernsey) Law 2017

The States of Guernsey have approved proposals to change Guernsey`s beneficial ownership framework. This legal update provides a high-level overview of some of these proposed changes. The States of Guernsey have adopted proposals to amend the legal framework for beneficial ownership. 5. Percentage of shares or voting rights held (for beneficial owners of companies) If they intend to approve the Bill entitled «The Beneficial Ownership of Legal Persons (Guernsey) Law, 2017» and to allow the judicial officer to present to Her Majesty an extremely modest petition praying for your Royal Approval. The Beneficial Ownership of Legal Persons (Guernsey) Act 2017 came into force on 15 August 2017. 1. Beneficial ownership category (for individual beneficial owners) It should be noted that «ownership» may be indirect in all cases and, in some cases, identification of owners may lead to investigation by a chain of enterprises. • The Registrar`s executive powers extend to designated persons.

The legislative amendments clarify that the Registrar`s supervisory and enforcement powers extend to the requirements for nominee relationships set out in the Beneficial Ownership of Corporations (Nominee Relationships) Regulations, 2017. 2. Characteristic in which shares or rights are held (for individual beneficial owners) These proposals also extend the powers of the Registrar to collect information, in line with the commitment made by the States of Guernsey in 2019 to further increase the transparency and accessibility of beneficial ownership information, in line with the EU`s Fifth Anti-Money Laundering Directive (2018/843) – see our legal update Click here. This will enable the Chancellor to identify, assess and better understand the risks of white-collar crime, money laundering and terrorist financing for the Bailiwick of Guernsey. Owners are all persons who directly or indirectly own: • The requirement for resident representatives to demonstrate that there are no beneficial owners of a relevant legal person should be removed. This information was initially needed to ensure that there were no gaps in the register. However, since the entry into force of the law, it has been demonstrated that there is always a beneficial owner of a legal person and, as such, this requirement is superfluous. Anyone who follows the evolution of the law knows that it was originally scheduled to come into force on June 30, 2017. While the start has been delayed, it is important to note that the original timeline for compliance with the law remains unchanged.

All new incorporations must comply with the new requirements from the outset (i.e. August 15, 2017) and all existing legal entities must comply by November 30, 2017 (or February 28, 2018 for corporations). The Registry of Guernsey accepts submissions relating to all legal entities from the start date. Owners are all persons who directly or indirectly hold more than 25% of the voting rights in the management and management of LLP. The purpose of this note is to provide a brief overview of the beneficial owners of corporations, but is not exhaustive of the provisions of the Act. This customer briefing has been prepared for Ogier`s clients and professionals. The information and opinions contained herein are not intended to constitute in-depth study or legal advice and should not be considered as a substitute for specific advice relating to individual situations. Since that date, all companies in Guernsey have been required to submit beneficial ownership information. New businesses must submit beneficial ownership information at the time of incorporation. All companies must ensure that any changes to beneficial ownership information are submitted to the registry within 14 days.

The proposals provide much-needed clarification in certain areas and «fill» gaps in the current beneficial ownership regime since the law came into force. In particular, the mandate of the Registrar`s enforcement powers will provide some comfort to licensees, who are currently subject to the enforcement powers of the Registrar and the GFSC. The Beneficial Ownership (Definition) Regulations 2017 (the Regulations), published on 25 July 2017, define the persons or classes of persons (legal or natural) who will be a registrable person in relation to a Guernsey entity. We now turn to what «ownership» means and what «beneficial owner» means for the purposes of the registry. Test 1: The ownership test The starting point is that the beneficial owner of a Guernsey entity is the individual, beneficial owner or trust that «ultimately owns» the Guernsey entity. A beneficial owner is the owner of a Guernsey company which is itself a Guernsey company or listed on a recognised stock exchange. If a natural person or beneficial owner is an owner according to the «ownership requirements» listed in the table above, it is registrable as a beneficial owner. If a trust meets the ownership requirements, there are specific requirements that we look at below. If no registrable person can be identified after Test 1, or if the resident representative has reason to believe that natural persons (other than an individual or beneficial owner identified in Test 1) may exercise control over the Guernsey entity, Test 2 shall also be considered. Test 2: The control test The second test requires the identification of the natural persons who ultimately control the Guernsey company by means other than ownership.

This would include, for example, cases where one person holds more than 25% of the voting rights of one company in Guernsey, but the exercise of those voting rights is controlled by another. The latter person is a beneficial owner in relation to the Guernsey entity. It is important to note that if there are natural persons in relation to a unit in Guernsey, Test 2 in addition to the natural persons/beneficial owners who satisfy Test 1 are all registrable in relation to that unit in Guernsey. Test 3: Management Test 3 only applies if no registrable owner has been identified in accordance with Test 1 or Test 2 and specifies that all natural persons holding the position of Head of the Guernsey Company may be registered as beneficial owners. There is no definition of «senior officials,» but the guidelines suggest that directors would be involved. What happens if the trustees of a trust own the Guernsey entity? There are additional formalities if the Guernsey entity is owned or controlled by an escrow agreement. In such cases, the beneficial owners of the Guernsey entity meet all of the following conditions: 1. a beneficiary (if the trust is a fixed trust); 2. any trustee who is a natural person; 3.

any agent who is a Guernsey company (currently with its directors or persons holding an equivalent position, although it is proposed to remove this requirement); 4. natural persons who would be beneficial owners of a non-Guernsey corporate trustee if that trustee were a Guernsey entity (with its directors or persons in an equivalent position); 5. any person empowered under the terms of the trust to appoint or remove trustees; b. manage the distribution of funds or assets of the trust; c. direct investment decisions; d. amend the trust deed; or e. revoke the trust indenture; and 6. any person known or believed to be controlled by the resident representative of the Guernsey entity. Note that nominee/bare trust relationships are ignored in relation to ownership of shares in a Guernsey company – in such cases, ownership is determined by determining for whom the simple trustee holds the shares.

It is not clear from the Regulation what the situation is if a non-natural person has any of the powers listed in point 5. above; However, it can be assumed that the persons registrable in relation to this entity would be registrable through the trust in relation to the exercise of this power. The Act establishes the Civil Registry Office for beneficial owners of legal entities, defines the powers and functions of the registrar and imposes new obligations relating to the provision of information to beneficial owners of legal entities and resident representatives. The Act also makes appropriate amendments to the `relevant laws for legal persons` – namely the Companies (Guernsey) Act 2008, the Limited Liability Companies Act 2013 (Guernsey) and the Foundations Act 2012 (Guernsey) – and makes amendments to other Acts to ensure that the Financial Services Commission of Guernsey has adequate supervisory powers in relation to persons, who regulates them.