Imminent market developments in the Isle of Man are expected to affect corporates, private clients and those operating in the capital markets over the coming months. Our Isle of Man team highlight the key changes and outline the steps required for compliance.
New Isle of Man beneficial ownership requirements
The Isle of Man Government recently passed the Beneficial Ownership (Amendment) Act 2021 which comes into force on 1 September 2021.
The changes have been made in response to the Island's Mutual Evaluation Report 2016, conducted by MONEYVAL, and will further improve the accuracy of the database which records beneficial ownership – defined as the natural person or people who ultimately own or control more than 25 per cent of a company, limited partnership with legal personality, or foundation*.
The amendment will reduce the time allowed to make updates, without penalty, to the Isle of Man's database of beneficial ownership by a nominated officer or corporate service provider to a 21-day limit.
Owners of impacted legal entities in the Isle of Man should note the change of deadline timings. This will ensure any changes to the registerable beneficial ownership after the 1 September 2021 are advised to us promptly.
Changes to the Isle of Man Companies Act 2006 requirements
The Isle of Man Government passed the Companies (Amendment) Act 2021 in June this year. However, the Isle of Man Treasury are still to pass the required Order which will appoint the day the Act will come into force, which is expected imminently.
One of the principal changes of the Act is that Isle of Man companies incorporated under the Companies Act 2006 will be required to register changes in directors with the Companies Registry within one month. This was a MONEYVAL recommendation and will align the companies incorporated under the Companies Act 2006 to the Companies Act 1931 in this respect.
Once the necessary Order has been issued we will update those clients affected so that any required future filings can be made within the new one-month deadline.
The imminent end of LIBOR
Benchmark Interbank Offered Rates (IBORs) - benchmark interest rates that indicate borrowing costs between banks - such as the London Interbank Offered Rate (LIBOR) are set to formally cease after December 31, 2021. IBORs will be replaced by new "risk-free" Alternative Reference Rates (ARRs), details of which are provided for information purposes below:
|GBP||Sterling Overnight Index Average||SONIA||Unsecured||Unsecured rate that covers overnight wholesale deposit transactions|
|USD||Secured Overnight Finance Rate||SOFR||Secured||Secured rate that covers multiple overnight repo market segments|
|CHF||Swiss Average Rate Overnight||SARON||Secured||Secured rate that reflects interest paid on interbank overnight repo|
|EUR||Euro Short-Term Rate||€STR||Unsecured||Unsecured rate that captures overnight call market rate|
|YEN||Tokyo Overnight Average Rate||TONAR||Unsecured||Unsecured rate that captures overnight wholesale deposit transactions|
With the absence of legislation to interpret the use of LIBOR in contracts after December 31 2021, we would encourage those with lending arrangements to review their positions, together with any documentation relied upon for group or associate lending. Should any reliance on LIBOR be identified, suitable amendments to the affected contracts should be made to ensure the continued effectiveness of contracts after LIBOR's retirement date.
At Ocorian we have produced precedent resolutions and loan agreement addendums to assist in the mitigation of the impact of the changes to LIBOR and other IBORs. If we can be of any assistance in respect of this exercise and you would like to know more about these services, then please do contact our team below or your usual Ocorian contact for further information.
* MONEYVAL is the Council of Europe's permanent monitoring body for assessing compliance with the principle international standards to counter money laundering and the financing of terrorism
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.