1. Proposals for a Register of Beneficial
Ownership of Guernsey Companies

2. Proposals for a Register of Beneficial Ownership of Guernsey Companies
Existing Position in Guernsey
Review of the Main Proposals
Definition of Beneficial Owner
UK Position compared to Guernsey Proposals
Access to the Information
The next steps
Questions

3. Existing Position in Guernsey
Appoint Resident Agent Ascertain the identity of all Beneficial Owners Keep in-house records Accessible by the GFSC and Law Enforcement Agencies Criminal and regulatory sanctions for non-compliance
Companies (Guernsey) Law all Guernsey companies are required to have a resident agent. Must be a CSP licenced by the GFSC (or a locally resident official). Record of Registered Agent is kept on the Guernsey Registry.
Registered Agent must identify all beneficial owners (of the shareholders interests) and maintain records of this at the Registered Office.
Records must be made available to GFSC, law enforcement and HM Procureur on request.
Although the information is held, there is no central database so there is potential for delay in investigations - this is the second consultation issued by the GFSC (first May 2015) to decide on the framework of the proposed register.

4. Main Proposals Central register
Administered by a Registrar of Beneficial Ownership
Resident Agent to notify Registrar of changes within 14 days
Standard Beneficial Ownership Declaration Forms
Criminal and regulatory sanctions for non-compliance
Include compliance and information gathering notices
Penalties
Central register to improve speed of access to information by relevant authorities.
Registrar – we do not yet know who is going to be appointed in this role or the exact form the Register will take.
Favoured proposal by industry is that this information is held by the GFSC. (Guernsey Registry or HM Procureur are other bodies being considered). Further consideration is being taken by the States on this point – no decision made yet.
Notification period 14 days – this is short, but expected to run from the date the Registered Agent becomes aware of a change.
Forms – proposed that statutory guidance and standard beneficial ownership declaration forms will be issued for submitting the information to the Registrar
Board of Directors – proposed that they be provided with the same beneficial ownership information as is provided to the Registrar. – likely this will be on request only. To facilitate compliance with AML/CFT regs and the Handbook.
Penalties – warnings + administrative financial penalties for minor breaches to strike off, unlimited fines and imprisonment for serious cases. No clarification yet on the bandings of financial penalties but this has been requested and how the penalties will interact with existing companies law and regulatory penalties – hope that consideration is given so that one offence does not give rise to fines under 3 different sets of laws.

5. Who are the Beneficial Owners?
A natural person who:
holds more than 25% of a company’s shares or voting rights;
holds the right, directly or indirectly, to appoint or remove the majority of a company’s directors;
Otherwise owns or controls a relevant legal person, or any underlying person or legal arrangement, which itself meets the 25% threshold in relation to the legal person in question.
No definition in the Companies Law . This proposed definition is based on the UK framework which we will touch on shortly as a comparison.
Requires individuals who exercise control of structures within a chain of ownership to be identified. These structures could be companies, foundations, trusts, firms or partnerships.
(c) goes over and above the requirements of the UK PSC register. Initial proposals suggested that in the case of trusts which own 25% of the shares or more, the trustees, settlors, beneficiaries and protectors should be identified along with any other individual exercising control over the trust.
Industry has raised concerns over this proposal – beneficiaries / discretionary beneficial classes and protectors do not have effective control over a trust. Some beneficiaries may never benefit and trust relationships are complex. It is expected that in cases of trust ownership, that the final regulation will require the register to refer to the Trustee (licenced fiduciary) of the XYZ Trust only. The Trustee will hold records on the underlyings (as required by law) and so in circumstances when this information is needed, it could be sought by the competent authority from the Trustee.

6. UK - Persons with Significant Control
Enacted 5 April 2016
Requires UK private companies and LLPs to keep a Persons of Significant Control (‘PSC’) Register
Definition of a PSC:
Individuals who meet one or more of the following conditions:
holds more than 25% of the company’s shares or voting rights;
holds the right, directly or indirectly, to appoint or remove the majority of a company’s directors;
exercise or have the right to exercise significant influence or control over a company;
exercise or have the right to exercise significant influence or control over any trust or firm (which is not a legal entity) which has significant control (under one of the four conditions above) over the company.
PSC register requires UK companies / LLPs to keep a register of the individuals who are its ultimate beneficial owners. It is already in force.
Certain relationships do not mean individual exercises significant control over a company:
- Those providing advice in a professional capacity (eg lawyer/accountant)
- Those engaged in a third party commercial agreement (e.g. customer/supplier/lender)
Employees or directors of the company
Liquidators

7. UK - Persons with Significant Control
Requirement for legal entities to be included on PSC Register in some circumstances.
The following details are required:
Name
Service address
Nationality
Date of birth
Residential address
Details of the nature of the control exercised
A company can have no Persons of Significant Control
Register kept at Registered Office and on Companies House
Available to the public
Legal entities:
Registrable – if the entity would have been classed as a PSC if it had been an individual and if it has to maintain its own PSC register in the UK
Relevant – if it is the first relevant legal entity in a chain of ownership
No PSCs? If reasonable steps have been taken to identify the existence of a PSC and the company is comfortable there are no individuals or legal entities which qualify as such, this fact must be noted on the PSC register. The guidance states that the register must say: ‘The company knows or has reasonable cause to believe that there is no registrable person or registrable relevant legal entity in relation to the company’.
Details of their holdings made public on companies house (although DOB details not fully released). Also registered office must make register available to public on request for fee of £12.

8. Guernsey – Beneficial Ownership Register
The following details will be required:
Name
Service Address
Nationality
Date of birth
Residential Address
Date the individual became a beneficial owner
Basis on which the individual has been identified and verified as a beneficial owner and the information that has been relied upon in doing so.
Legislation also to be applied to LLPs, Limited Partnerships and Foundations
Nominee shareholders also to be included on the register.
Final bullet point – basis individual has been identified as beneficial owner. Industry has queried why this needs to be included. Administratively this will be a burden to SPs who will need to update the detail (within 14 days) as beneficial owners change. It is likely that SPs may now need to state that they have carried out verification (rather than explain what they have done to verify).
LPs and foundations are not currently subject to any specific beneficial ownership requirements (except for AML/CFT Proceeds of Crime Regulations and the GFSC Handbooks). Proposal is that definitions of beneficial owner (and registered agent) now be applied to all legal persons.
Possible exemptions – listed cos, open-ended/closed-ended investment cos and investment schemes – currently all exempt from beneficial ownership requirements under Companies and LLP laws. Whether they will remain exempt was under consultation.
Nominee shareholders – proposed that both the nominee shareholder and the beneficial owner be included on the register. Would also expect the nominee to be looked through and not included. Also being asked to state why the nominee relationship is in place. Nominee relationships are well understood by fiduciaries (ease of administration/confidentiality) - industry has questioned whether standard practice needs to be justified, but this is expected to stay in place – help Guernsey meet FATF standards.

9. Who will be able to view the information?
Accessible by Guernsey authorities Guernsey authorities can disclose this information to foreign authorities Not available to the public The register will be protected by confidentiality rules and encryption, but the form the register will take is still under consideration. Various ideas have been proposed by industry to address the risk of data security.
Guernsey authorities can disclose relevant information with foreign authorities - for specified purposes. (law to mirror those already in place in other Guernsey Law i.e. Disclosure Law such as for prevention, detection, investigation and prosecution of criminal offences, civil investigations and assisting intelligence services. Expected that it will not be permitted to provide to foreign authorities with registration functions.
Greater sharing powers than, as a comparison, are enacted in Jersey where information will only be provided following a request from UK national crime agency and related organisations
Risk of data security a concern (cyber crime/theft/hacking).
Some industry proposals for the form of the register :
Hold data physically or on a standalone computer with no access to the internet;
Using Themis system to hold his information (secure system already used to hold confidential information);
Having two registers - individual’s names are held on a separate database and cross referenced by number to the main database;

10. What next?
Consultation closed on 8 July 2016; details on implementation are awaited. Guernsey has signed an ‘Exchange of Notes’ with the UK Government to mutually share beneficial ownership information by 30 June Guernsey has also committed to a new international initiative, led by the G5 Countries, to automatically exchange beneficial ownership information in the future. Guernsey is a well regulated International Finance Centre committed to fighting financial crime. There is a need to adapt to international pressures for greater transparency - but without wholly removing individuals’ rights to personal privacy.
Costs? We have been given no guidance yet as to the cost of putting the register in place. It has been pointed out that the cost of Regulation in Guernsey is significant and care should be taken not to damage Guernsey’s ability to compete with other jurisdictions on price. Suggested it be paid by States of Guernsey
Exchange of notes – commitment to share with each other information on beneficial owners of companies in the UK and Guernsey contained in the PSC register and beneficial ownership registers respectively. This information will be provided on request and within 24 hours if urgent. This will come into effect by 30 June 2017 so the beneficial ownership register and applicable legislation will therefore be in place before this date. This is a relatively short timeframe – in particular for existing companies.
Automatic exchange of information as of 29 September 2016 , 48 countries have committed to supporting this (including the Guernsey, Jersey and the UK). It will require a new international standard for automatic exchange of beneficial ownership information. Expected to significantly help law enforcement authorities tackle misuse of corporate structures engaged in financial crime, tax evasion and money laundering.
international pressures – Financial Action Task Force (FATF), G20 and the EU

11. Questions? Paul Hodgson Managing Director Tel: 01481 739145
Hannah Bisson
Relationship Manager
Tel:
Paul Hodgson
Managing Director
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