THE BENEFICIAL OWNERSHIP SECURE SYSTEM ACT, 2017

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INFORMATION MEMORANDUM:

THE BENEFICIAL OWNERSHIP SECURE SYSTEM ACT, 2017

The Beneficial Ownership Secure System Act, 2017 (“BOSS Act”) will come into force on June 30, 2017 to facilitate the effective storage and retrieval of beneficial ownership information for all companies registered in the British Virgin Islands (“BVI”) under the BVI Business Companies Act, 2004 (as amended) (a “BVI company”). Such beneficial ownership information will be stored on a highly secure electronic database known as the Beneficial Ownership Secure Search System (the “BOSS System”).

The BOSS System has been developed to enable the BVI to comply with its obligations under the Exchange of Notes entered into with the United Kingdom (“UK”), pursuant to which the BVI and UK authorities have agreed to exchange beneficial ownership concerning entities registered in their respective jurisdictions. The Exchange of Notes demonstrates the importance that both the BVI and UK governments place on the access to beneficial ownership information as a means of preventing and detecting corruption, money laundering, terrorism financing, financing of the proliferation of weapons of mass destruction and other serious and organised crime.

Who is a beneficial owner under the BOSS Act?

A beneficial owner is the natural person who ultimately owns or controls a BVI company and includes, though not restricted to:

  1. a) in the case of a legal person other than a BVI company whose securities are listed on a recognized stock exchange, a natural person who ultimately owns or controls, whether directly or indirectly, 25% or more of the shares or voting rights in the legal person;
  1. b) in the case of a legal person, a natural person who otherwise exercises control over the management of the legal person;
  1. c) in the case of a legal arrangement:
  2. the partner or partners who control the partnership;
  3. the trustee or other person who controls the legal arrangement; or
  4. the settlor or other person by whom the legal arrangement is made.

Notably, the threshold of 25% which is in line with the FATF Recommendations, is higher than the 10% threshold set under BVI Anti-money laundering legislation.

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Individuals appointed as insolvency liquidators, administrators, administrative receivers and creditors who appoint a receiver over 25% of more of shares or voting rights in respect of a BVI company are also caught by the definition of a beneficial owner under the BOSS Act.

In the case of a deceased beneficial owner, the individual acting as executor or personal representative of the deceased’s estate will be considered as the beneficial owner for the purposes of the BOSS Act.

What information will be registered on the BOSS System?

Each registered agent will be required to maintain an RA database on the BOSS System on which prescribed information will be registered with respect to each BVI company for which it acts as registered agent.

Particulars required with respect to each BVI company

– name (including alternative names);

– the incorporation number or its equivalent;

– date of incorporation;

– status; and

– registered address.

Particulars required with respect to each beneficial owner of a BVI company

– name;

– residential address;

– date of birth; and

– nationality.

It is anticipated that following the enactment of the BOSS Act, an identification number (as provided in a passport, driver’s licence or other government issued identification as prescribed) will also be required to be registered in respect of each beneficial owner.

However, this is not a requirement as at the date of this information memorandum for purposes of the BOSS Act.

Particulars will also be required to be registered in respect any legal entity connected to a BVI company (“registrable legal entity”) which:

  1. a) would be a beneficial owner if it were an individual; and
  2. b) one or more of the following applies to it:
  3. it is a legal entity which is an exempt person;
  4. it is a legal entity the securities of which are listed on a recognized stock exchange;
  1. it is a licensee or foreign regulated person; or
  2. it is a sovereign state or a wholly owned subsidiary of a sovereign state.

Are there any exemptions from the requirement to register beneficial ownership information?

A BVI company is exempted from the requirement to register beneficial ownership information on the BOSS System if it meets one or more of the following conditions:

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  1. a) it is recognized, registered or otherwise approved as a mutual fund under the Securities and Investment Business Act, 2010 including an approved fund, an incubator fund, a public fund, a professional fund and a private fund;
  1. b) its shares are listed on a recognized stock exchange;
  2. c) it holds a license under BVI financial services legislation; or
  3. d) it is a subsidiary1 of a BVI company that falls within (a) or (b) above.

Who has access to each RA database on the BOSS System?

Each registered agent will be responsible for maintaining its own RA database on the BOSS System in respect of the companies for which it acts as registered agent. Such database will only be accessible by that registered agent and individuals designated by the Minister of Finance by Order (“designated persons”). Designated persons will need to pass security vetting tests and be deemed fit and proper prior to being so designated and will further be required to subscribe to an Oath of Confidentiality. A list of designated persons will be published in the BVI Official Gazette in due course.

How will information be shared?

Each designated person will have access to the BOSS System from a physically secure premise and IT system in the BVI and will provide the results of any search of the BOSS System requested under the BOSS Act within the time frames prescribed thereunder. A designated person is only allowed to execute a search of the BOSS System if formally requested to do so by a senior officer of any of the following BVI authorities:

  1. a) the Financial Investigation Agency;
  2. b) the Financial Services Commission;
  3. c) the International Tax Authority; and
  4. d) the Attorney General’s Chambers.

A search also cannot be executed by a designated person without certification that:

– the request for the search is proper and lawful and in compliance with the legislation governing the affairs of the authority making the request and any international agreement administered by it; or

– in response to a request from a designated UK law enforcement authority.

How long is beneficial ownership information required to be maintained on the BOSS System?

Beneficial ownership information is required to be maintained on the BOSS System for five years following the dissolution of a BVI company or five years after the BVI company ceases to be a BVI company. Such requirement does not apply where an entity has ceased to be a BVI company or has been struck off the BVI Register of Companies prior to January 1, 2016.

1 A corporate and legal entity (the “subsidiary”) is a subsidiary of another corporate and legal entity (the “parent”) if the parent:

(a) holds, directly or indirectly, a beneficial interest in 75% or more of the shares in the subsidiary; or

(b) holds, directly or indirectly, more than 75% of the voting rights in the subsidiary.

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What are the obligations surrounding changes in beneficial ownership?

Within 15 days of becoming aware of a change of any of the prescribed beneficial ownership information, a BVI company is required to notify is registered agent of such changes and the date such changes took place.

Within 15 days of being notified by a BVI company of a change or otherwise becoming aware of a change of any of the prescribed beneficial ownership information, the respective registered agent is required to update such information on its respective RA database maintained on the BOSS System.