Worldwide: Ultimate Beneficiary

Cayman Islands and BVI. On April 8, 2016, a UK-Cayman Islands exchange of notes was signed regarding the sharing of beneficial ownership information. Also on that day, a similar UK-British Virgin Islands (BVI) agreement was entered into. The notes are the same, mutatis mutandis. Articles 2 and 3 of the technical protocol attached to the UK-Cayman Island notes read as follows:

  1. The Government of the United Kingdom has established a comprehensive central register of people with significant control ("PSC register") to be held and maintained by the Companies House. This will be a publicly accessible central register in respect of companies, limited liability partnerships (LLPs) and Societates Europaeae (SEs) incorporated in the United Kingdom. This will be online and searchable free of charge by both name of corporate entity and name of individual. Some PSC information is suppressed from the public central register under exceptional circumstances. All PSC information, including the information suppressed from the public central register, is available to the United Kingdom law enforcement authorities.
  2. Acting only in furtherance of their functions, Cayman Islands law enforcement authorities will be able to request from the United Kingdom law enforcement authorities all of their non-public adequate, accurate and current beneficial ownership information from the PSC register.

By June 30, 2017, each of the BVI and the Cayman Islands will establish a centralized platform of beneficial ownership information to be maintained by the general registry. The platform will provide timely access to adequate, accurate, and current beneficial ownership information about private corporate and legal entities incorporated in the Cayman Islands and the BVI, respectively, as these entities are specifically defined in the EU's fourth Anti-Money-Laundering (AML) Directive. That directive appears to apply only to corporate entities and not to trusts; thus, the notes apply only to private companies. It is not clear, however, whether the BVI and Cayman registries will be publicly searchable.

The UK PSC register and the notes define a beneficial owner as any natural person who ultimately owns or controls a corporate or legal entity through direct or indirect ownership of more than 25 percent of the shares or voting rights or ownership interest in that entity or through control via other means (see article 3(6) of the fourth AML Directive).

The notes reflect the Lough Erne declaration (from the 2013 G8 summit in Ireland, in which "[t]ax authorities across the world should automatically share information to fight the scourge of tax evasion." Moreover, at the 2015 London meeting of the Overseas Joint Ministerial Council in London (involving elected representatives of Anguilla, Ascension Island, Bermuda, the British Virgin Islands, the Cayman Islands, the Falkland Islands, Gibraltar, Montserrat, Pitcairn, St. Helena, Tristan da Cunha, and the Turks and Caicos Islands), it was agreed that company transparency was a high priority; the British territories agreed to hold companies' beneficial ownership information in central registers (or similarly effective systems), with UK law enforcement authorities to develop timely, safe, and secure information-exchange processes for the purposes of law enforcement.

Information sought under the notes will be provided within 24 hours. An urgent request will be attended to within an hour. Due to the criminal element that may be associated with the ultimate beneficiary, the notes provide for possible criminal penalties against a beneficiary who is alerted that information is sought.

A request for information sought by a participant in the exchange of notes must be submitted to the designated point of contact, which will be permanently staffed by individuals who have passed security vetting tests to a standard agreed with the UK National Crime Agency. The notes dictate that the designated point of contact be provided with both secure premises and IT systems.

United States. Proposed Treasury regulations (REG-127199-15) seek to pierce the veil behind a non-US-owned LLC that elects to file as a disregarded entity. A May 5, 2016 letter from the Treasury Secretary to the House of Representatives explains that such a foreign-owned (non-US) LLC has no obligation under the Code to obtain a tax identification number or to report information to the IRS unless it receives US-source income or carries on a US trade or business. Thus, the foreign owners of non-US assets or bank accounts are shielded.

The proposed regulations amend section 301.7701-2(c) and treat a domestic disregarded entity that is wholly owned by one foreign person as a domestic corporation separate from its owner for the limited purposes of the reporting and record maintenance requirements under section 6038A. Thus, the entity must file an IRS form 5472 information return with respect to reportable transactions between the entity and its foreign owner or other foreign related parties. Those transactions are recognized under general US tax principles if the entity is a corporation for US tax purposes. The entity must maintain sufficient records to establish the accuracy of the information return and of the correct US tax treatment of such transactions. Moreover, the entity has a filing obligation and consequently must obtain an enterprise identification number (EIN) by filing an IRS form SS-4 that includes responsible-party information. The introduction to the proposals states that they do not alter the framework of the existing entity classification regulations, including the disregarding of some entities.

Originally published by Canadian Tax Highlights, June 2016.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.