The Beneficial Ownership Act

On 1 July 2017 The Beneficial Ownership Act will come in to force and it is relevant to all Isle of Man companies.  This Act introduces a central database of corporate beneficial ownership for most legal entities.

The beneficial owner is the natural person who ultimately owns or controls the company.  The Act defines a beneficial owner as any natural person who owns or controls more than 25% of the legal entity.  If two or more natural persons each own or control an interest in a legal entity to which the Act applies, each of them will be treated for the purposes of the Act as a registrable beneficial owner.  It is the responsibility of the Nominated Officer to be aware of who the beneficial owner(s) is/are. If shares are held in a nominee capacity please note that the named shareholder is the legal owner only and it is the ultimate beneficial owner who must be known and disclosed on the register.

The Isle of Man Companies Registry will be writing to all Nominated Officers as noted on the Annual Return and providing them with an enrolment code so they are able to log on to the new Beneficial Owner Service (part of Government Online Services) and follow steps to complete the necessary details.  It must be declared on the annual return that this information is up to date and correct.

The legislation states that it is the beneficial/legal owner who must keep the Nominated Officer informed of any changes to ownership and the Nominated Officer must update the database at the Companies Registry (via Online Services) within one month of any change.  The Nominated Officer must also log on each year and confirm the details are correct.  If the company does not have a registrable beneficial owner then the Nominated Officer is still required to confirm this on the database. Penalties will be payable for late notifications although in the short term we expect and hope that there will be some leniency until the system has become established.

The information will be kept on the Government Secure Central Private Database and will be maintained as part of the Companies Registry and will be overseen by the Isle of Man Financial Services Authority.  Information on the Central Database will not be public and will only be accessible by a small number of designated officials on the Isle of Man, on request to the Island’s Financial Intelligence Unit and to the intelligence and law enforcement agencies of countries with which the Isle of Man has a beneficial ownership share agreement.

The onus is on the Nominated Officer to keep the database up to date and all details must be completed by the date of the next annual return of the company or before 1 July 2018 which ever date comes first.

Please note that this is a new area and the above is our interpretation of new rules that are very fresh indeed. For more detail and a full picture this can be found at www.gov.im/boa.