It is no surprise that many persons in structuring their affairs opt to own assets through companies and, in some instances, companies located in “offshore” jurisdictions. One of the historical benefits of this method of structuring was to keep shareholder information discreet. Most “offshore” jurisdictions previously did not make shareholder information public and in Jamaica, only the information as to the immediate shareholders of a company were publicly available. This changed in 2017, with amendments to our Companies Act which required the disclosure of beneficial ownership.

Who is a beneficial owner?

The Companies Act currently defines “beneficial owner” as:

(i) in relation to shares, means the individual on whose behalf the shares are held or on whose behalf a share transaction is conducted;

(ii) in relation to a company, means the individual who exercises ultimate ownership or ultimate effective control.

So, what then is ultimate ownership or ultimate effective control? Ultimate ownership means any situation in which ownership of a company is exercised by means of control other than direct control and includes any arrangement utilising one or more persons through which beneficial ownership of a company is established. Ultimate effective control means the control exercised by an individual who (a) is in a position to determine the policy of the company or to make the final determination as to the decisions to be made by the company; or (b) by himself or together with a connected person is in a position to control more than 50 per cent of the voting power of the company or would hold interest in more than 50 per cent of the issued shares of the company.

A company cannot be declared as a beneficial owner, it must be an individual. However, as it currently stands there may be some instances in which it may be difficult to easily identify an individual who falls squarely within one of the beneficial ownership criteria listed in the Act. Recently, in a session hosted by the Companies Office of Jamaica (COJ), it was indicated that further amendments are to be made to the Companies Act to include the beneficial ownership provisions (discussed further below).

Register of beneficial owners

It is also important to note that a register of beneficial owners is another statutory book required to be kept and maintained by the company with the following information in relation to the beneficial owner: (a) name, (b) address, (c) occupation, (d) nationality, (e) class and number of shares held, and (f) who holds the shares as shareholder on behalf of the beneficial owner.

Duty to disclose

Prior to the 2017 amendments to the Companies Act, the legislative position was that “no notice of any trust, express, implied, or constructive, shall be entered on the register, or be receivable by the Registrar, in the case of companies registered in the Island.”

The Companies Act now requires a shareholder who holds shares in the company on behalf of, or at the direction of another individual, to notify the company and provide the particulars of the beneficial owner. This includes a declaration where shares are held on trust or shares are held by another company. The law goes even further to indicate that in the event the company becomes aware of the beneficial ownership of shares in the company, and it has not been notified, the company is to request in writing that the shareholder advises the company if it holds shares on behalf of another and if so to supply the necessary information.

Failing to comply with the provisions of the Companies Act as it relates to beneficial ownership will result in the company, every officer, the shareholder, and beneficial owners, as applicable, who caused the failure, to be liable to a fine not exceeding $500,000.

Also, companies generally, especially those incorporated prior to the 2017 amendments, may want to review their articles to ensure they are in conformity with the current legal position as it relates to the declaration of beneficial owners.

The public register

As it stands, information on beneficial owners disclosed in various forms filed with the COJ are publicly available for viewing by all. We understand that amendments to the Companies Act may include a register of beneficial owners to be kept specifically by the COJ where such information will only be released to specific persons. The accessibility of a register of beneficial owners by the public was the subject of a recent ruling in Luxembourg where the court ruled that access to this information is only for professionals who have obligations under certain rules relating to money laundering and terrorist financing and to assist them in carrying out those obligations with potential access to be given to representatives of the press who have a legitimate interest in being able to consult the register of beneficial owners as part of their journalistic research. Whether Jamaica will be guided by this ruling, we will wait and see.

So, what’s next?

The Ministry of Industry, Investment and Commerce and the COJ are currently undergoing the process to propose changes to the collection of beneficial ownership information to include:

i. threshold being lowered from 50 per cent to 25 per cent;

ii. new powers to be given to the Registrar of Companies to verify beneficial ownership information though investigation; and

iii. an increase in current sanctions and introduction of new ones.

As we wait to see what amendments may be made to the Companies Act, companies, shareholders and even beneficial owners should ensure they are in compliance with the current beneficial ownership declaration requirements. Directors and secretaries should also ensure that the register of beneficial owners and filings made with the COJ are accurate and up to date and that they keep abreast of any developments to the proposed amendments to the Companies Act so as to ensure the company remains compliant.

Shaniel May Brown is an Associate at Myers, Fletcher & Gordon and is a member of the firm’s Commercial Department. Shaniel may be contacted via shaniel.maybrown@mfg.com.jm or www.myersfletcher.com . This article is for general information purposes only and does not constitute legal advice.