The Isle of Man Companies (Beneficial Ownership) Act 2012 (the "Act") came into force on 1 September 2013 and is stated to be an important step in the Island's commitment to promoting transparency in respect of company ownership.
The Act introduces a completely new requirement for certain Isle of Man companies to appoint a 'nominated officer' whose role will be to hold details about the ultimate beneficial owners of the company. Some companies are exempt from the Act (including public limited companies; corporate service providers ("CSPs") licensed by the Financial Supervision Commission (the "FSC") and client companies of CSPs). This is because the Isle of Man's Anti-Money Laundering legislation already obliges CSPs to hold details of the beneficial ownership of their client companies.
The Act will therefore catch most Isle of Man trading companies which do not employ the services of a CSP and are not themselves licensed by the FSC or other regulator. The Act does not apply to companies formed pursuant to the Companies Act 2006 (the so called "NMV" or "New Manx Vehicle").
The nominated officer must be either an Isle of Man resident corporate service provider licensed by the FSC or an Isle of Man resident individual. Companies may elect to have more than one nominated officer (in which case the functions and liabilities of each officer are joint and several). It is important to stress that the information held by the nominated officer will not be publically accessible, and in the case of individual beneficial owners is limited to name, usual address, nationality and date of birth. In the case of corporate beneficial owners, the information is slightly different. Members who hold shares in the company for themselves in their own name do not have to give their details to the nominated officer.
An important safeguard is that the list of persons entitled to request the information held by the nominated officer is limited to regulatory and law-enforcement entities such as the FSC, the Isle of Man Constabulary Financial Crime Unit and the Isle of Man Attorney General.
The penalties for non-compliance with the Act can be severe. If a nominated officer believes that a member has failed to disclose the necessary details of true beneficial ownership, or has falsely declared such details, the nominated officer must give notice to the company. The company may then decide to restrict that member's rights to transfer their shares, to vote or to receive dividends or capital. As an ultimate sanction, the company may even cancel the member's interest in the company. If the Company fails to appoint a nominated officer, it commits a criminal offence and is liable to a fine.
Companies to whom the Act applies are required to have appointed a nominated officer by 2 September 2013. Such companies do not have to provide the Companies Registry with details of their nominated officer until submission of the next annual return due in the year commencing 1 September 2013. Any new companies formed after this date which are caught by the Act must file details of the nominated officer at the time of incorporation.
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