I’m a nominated officer under the Beneficial Ownership rules, but I can’t find out who owns the company. What do I do?

All Isle of Man corporate and legal entities are covered by the Beneficial Ownership Act 2017 (the “Act”), which replaced the Companies (Beneficial Ownership) Act 2012. Under the Act, every company must have a nominated officer who keeps an eye on who actually owns the company, and updates the Companies Registry on the island when this changes so that someone owns more than 25% of the company.

A nominated officer needs to hold a reasonable amount of data on all beneficial owners. This includes their name, address (residential, and if different, the service address), nationality, date of birth, the date they acquired their beneficial interest and what the nature of that interest is as a percentage.

If a beneficial owner owns or controls a percentage greater than 25%, then they become a registrable beneficial owner and the nominated officer must submit their details to be entered online into the Isle of Man Database of Beneficial Ownership.

How do I find out who is a registrable beneficial owner?

A nominated officer must make a request to the company. It is the responsibility of the company to ascertain beneficial ownership. These details must be provided to the nominated officer within a month of their request. The company must also tell the nominated officer when the status of beneficial ownership changes within a month of learning (or having reasonable cause to believe) that a change has happened.

The company must verify these details from a reliable and independent source. The legal owner of the company must obtain this information. It is an offence to fail to obtain this information.

It is also an offence if the legal owner provides false, deceptive or misleading information (whether the legal owner knows or is reckless as to whether this is the case). This offence can carry custodial sentence of up to two years.The beneficial owner and an officer of the company can also be subject to a penalty if they fail to take reasonable steps to prevent this offence.

If the beneficial owners do not tell the nominated officer their details, or changes to them, then the company can restrict the rights of the beneficial owner (such as voting rights, rights to further shares, payments due or ability to transfer/assign any interest). The company can even ultimately decide to cancel the legal owner’s interest.

What if there aren’t any beneficial owners?

The nominated officer should still visit the database once a year on the annual return date to confirm that there are no registrable beneficial owners and that the information on the database remains up to date and correct.

What is my personal liability as a nominated officer?

A nominated officer may commit an offence if they fail to maintain and preserve the required information, or if they know or are reckless to whether they give false information to the Isle of Man authorities. This offence also carries a custodial sentence of up to two years.

What powers do the Isle of Man authorities have?

The Financial Services Authority on the Isle of Man (the “FSA”) has practical oversight of the implementation of the Act. The FSA can make visits to companies to check if they are compliant. A nominated officer will get a visit within four weeks of initial contact by the FSA. The FSA will check relevant material to make sure that the information on the database is correct. The nominated officer will be provided with a copy of the record of inspection. The FSA may issue a report to the nominated officer if it identifies any issues. This report will tell the nominated officer what these issues are, what needs to be done and what the deadline is.

How can Middleton Katz help?

We can provide further information on how to comply with the Act, including examples and advice on how to look behind a corporate structure to find a beneficial owner.

We can act as your Nominated Officer under the Act.

We offer free, impartial and confidential guidance to anyone looking to find out more. Get in touch today for a no-obligation consultation on 01624 648 500 or email us at ask@middletonkatz.com.

©2018 Middleton Katz Chartered Secretaries LLC is licensed by the Isle of Man Financial Services Authority

Log in with your credentials

Forgot your details?