Nigel Meeson QC has recently published the article “Further transparency in respect of Cayman Islands companies”.
The Cayman Islands has often been referred to pejoratively as a “secrecy jurisdiction”. The two main supports for the secrecy allegation were on the one hand the existence of “secrecy” legislation, The Confidential Relationship Preservation Law (CRPL) dating back to the 1970s, which made it a criminal offence to divulge “confidential information” as defined in that Law, and on the other hand the absence of publicly available information about the directors and shareholders of Cayman Islands companies unlike, for example, the UK.
In fact, not only was nobody ever held criminally liable for divulging confidential information, but no prosecution was ever brought under CRPL. More significantly, the one thing the law never did was to prevent confidential information being shared with law enforcement agencies and foreign tax authorities. The Cayman Islands has been at the forefront of requiring licensed service providers to collect and retain verified beneficial ownership information and providing an effective mechanism of making such information available at the request of foreign law enforcement and tax authorities. In this respect it was streets ahead of the UK, which did not require such information to be verified so that Michael Mouse could be named as a shareholder or director, or US states, which did not even require such information to be collected in the first place.
In any event, the so-called “secrecy” law was repealed in 2016 and replaced with the Confidential Information Disclosure Law, 2016 (CIDL), which is a more modern and fit-for-purpose law based upon civil liability for breach of confidence under common law and as such wholly unobjectionable.
The question of the lack of availability of public information as to the directors and shareholders of Cayman Islands companies has also been addressed recently by the coming into effect of an amendment to the companies legislation and by a significant government announcement.
Public register of directors
Section 5 of the Companies (Amendment) Law 2019 introduced a requirement for the Registrar of Companies to make available to the public, upon payment of a fee, the names of the current directors of a Cayman Islands company and this Law came into force on October 1, 2019. Now for the very first time anyone who wishes to know the identity of the directors of a Cayman Islands company may pay CI$50 (US$60) and visit a kiosk in the lobby of the Government Administration Building in George Town to find out. A similar provision applies in relation to Limited Liability Companies under section 3 of the Limited Liabilities Companies (Amendment) Law 2019.
This article was originally published in the Offshore Update column in the Asian-Mena Counsel magazine Volume 17 Issue 1.