Beneficial ownership regime in Bermuda: an overview

What are the principal requirements?

Under the BO Regime, Entities must:

• Identify: Take reasonable steps to identify (including giving notice in writing to) every individual beneficial owner and every relevant legal entity ("RLE") they know, or have reasonable cause to believe, to be Beneficial Owners or RLEs; 
• Verify: Take reasonable measures to verify the identity of their beneficial owners and RLEs using documents, data or information obtained from a reliable and independent source, and maintain records of the measures taken and documents used for such verification; 
• Establish and maintain a beneficial ownership register: Establish and maintain a beneficial ownership register ("BO Register") recording the minimum required information in relation to all beneficial owners and RLEs, and keep the register up-to-date; and 
• File with the RoC: Promptly file with the RoC all minimum required information in relation to all beneficial owners and RLEs and any changes to that information.  

 Who is a "beneficial owner"?

A beneficial owner will always be an individual (natural person). An individual will be a beneficial owner if that individual: 

• directly or indirectly owns or controls 25% or more of the shares, interest, voting rights or partnership interests in the Entity;
• otherwise exercises ultimate effective control over the management of the Entity; or
• exercises control over the Entity through means other than ownership.

Where no individual meets the requirements above, an individual who is a senior manager of the Entity will be identified as the beneficial owner.

What is a "Relevant legal entity" ("RLE")?

An RLE is a legal entity (e.g. company, LLC etc.) or legal arrangement (e.g. a trust, partnership or other similar arrangement) that, if it were an individual, would be a beneficial owner. RLEs and beneficial owners are collectively known as "Registrable Persons".

What are the ongoing obligations of Entities?

An Entity that is required to maintain a BO Register must ensure that the required information is always adequate, accurate and up-to-date. In particular, it must:

• give notice in writing to all identified Registrable Persons and anyone it knows, or has reasonable cause to believe, is a Registrable Person that they must provide the Entity with the minimum required information (unless all minimum required information has already been received);
• seek confirmation of any change in information held in relation to a Registrable Person when becoming aware or having reasonable cause to believe a change has occurred;
• update the BO Register within 14 days of being notified of a change to the information recorded in the register;
• file the updated (and verified) information with the RoC; and
• retain records in relation to any Registrable Person for a period of 5 years from the date it ceased to be a Registrable Person.

What required particulars must be entered in the BO Register?

Restriction Notices

An Entity is obliged to ensure that its beneficial ownership information is adequate, accurate and up-to-date. Where the Entity has requested information by written notice from a person it knows or reasonably believes to be a Registrable Person, and such Registrable Person fails to give the required information within the specified time limit without reasonable excuse, the Entity may impose restrictions on that person's shares or interests. Such restrictions may be imposed by the Entity directly if its constitutional documents permit, or otherwise by application to the Court. Such restrictions may include a requirement that:

1. any transfer of the shares or interest is void;
2. no voting rights are exercisable in respect of the shares or interest;
3. no further shares or interest may be issued in right of the shares or interest or in pursuance of an offer made to their holder;
4. no payment may be made of sums due from the Entity on the shares or interest, whether in respect of capital or otherwise;

until the Entity receives (and satisfactorily verifies) the requested information.

Who can access information in the BO registers?

The beneficial ownership register maintained by the Entity, and the central register of beneficial ownership information filed with the RoC are not currently accessible by the general public. However, access to the central beneficial ownership register may be granted by the RoC to: 

• Certain competent authorities, including the BMA, where disclosure is for the purpose of exercising their statutory functions; 
• Persons concerned with obtaining goods or services for the Bermuda Government in accordance with the Code of Practice for Project Management and Procurement; and 
• AML/ATF financial institutions and designated non-financial businesses and professions in order to conduct customer due diligence and discrepancy reporting. 

The eligible party seeking access to the information on the central register must submit an application to the RoC, along with payment of an applicable fee. If the RoC grants access, the party accessing it is prohibited from disclosing the information to any other person unless for the purpose for which the access was granted and with the consent of the RoC. Criminal penalties may apply in cases of improper disclosure, in each case. 

Importantly, the RoC may restrict or prohibit disclosure of information on the central register in certain circumstances. It is anticipated this will include circumstances in which a beneficial owner may be at serious risk of exposure to harm, such as fraud, kidnapping, blackmail, extortion, harassment, violence, intimidation.

Court powers

The Court has broad powers to order rectification of BO Registers (where information is included or omitted by mistake) and to make orders in respect of restrictions on shares or interests in an Entity.

Offences and penalties 

Breach of the BO Act may result in the RoC issuing (i) a default fine or (ii) a civil penalty of up to $250,000. Where a breach is also an offence under the BO Act, penalties including fines of up to $25,000 or imprisonment for up to two years may be imposed.

A person who unlawfully discloses details from a BO Register may be liable to imprisonment for up to five years and/or a fine of up to $250,000.