June 1, 2018 Andrew Tarpey

UK TRIES TO OPEN UP OFFSHORE OWNERSHIP REGISTERS

BY ANDREW TARPEY

The establishment of companies in offshore jurisdictions is known to offer numerous benefits to individuals: they offer privacy to those who don’t want their name available in the public record, they present asset protection to those who may live in overly litigious societies where they may fall victim to frivolous lawsuits, and the legal red tape involved in maintaining such companies is minimal, usually consisting of having a registered agent on the ground in that jurisdiction and paying annual fees to the government there. However, offshore companies have not escaped criticism from those who believe that the names of the beneficial owners of such companies should be made public and that doing so will minimize instances of tax evasion and money laundering. There has been some recent hubbub over a plan in the British parliament to force the UK’s overseas territories to introduce public registers of company ownership. Members of Parliament Andrew Mitchell from the Conservative Party and Margaret Hodge of the Labour Party have spearheaded the move and believe that the UK can use its relationship with the territories and influence over them to force them to publicly disclose the owners of the companies registered in those jurisdictions. Hodge added an amendment to Parliament’s recent Sanctions and Money Laundering Bill that requires the 14 overseas territories of the UK to introduce public ownership registers by the end of 2020.

The bill passed on May 1. The territories already have a process where they open the registers of beneficial ownership of companies to law enforcement authorities if it’s part of their investigation into criminal matters, but this amendment would make the registers open to the general public.

The 14 territories subject to the move include offshore centers such as the Cayman Islands, British Virgin Islands and Bermuda. The British overseas territories are former colonies of the United Kingdom. They do not form part of the United Kingdom itself and are self-governing; they establish their own local laws and elect their own representatives. The UK holds responsibilities for the doing so will minimize instances of tax evasion and money laundering. There has been some recent hubbub over a plan in the British parliament to force the UK’s overseas territories to introduce public registers of company ownership. Members of Parliament Andrew Mitchell from the Conservative Party and Margaret Hodge of the Labour Party have spearheaded the move and believe that the UK can use its relationship with the territories and influence over them to force them to publicly disclose the owners of the companies registered in those jurisdictions. Hodge added an amendment to Parliament’s recent Sanctions and Money Laundering Bill that requires the 14 overseas territories of the UK to introduce public ownership registers by the end of 2020.

The bill passed on May 1. The territories already have a process where they open the registers of beneficial ownership of companies to law enforcement authorities if it’s part of their investigation into criminal matters, but this amendment would make the registers open to the general public.

The 14 territories subject to the move include offshore centers such as the Cayman Islands, British Virgin Islands and Bermuda. The British overseas territories are former colonies of the United Kingdom. They do not form part of the United Kingdom itself and are self-governing; they establish their own local laws and elect their own representatives. The UK holds responsibilities for the London. Bermuda’s constitution, similar to the other overseas territories subject to this legislation, grants it the right to self-govern, and only allows the United Kingdom to handle matters of foreign diplomacy and defense. Burt makes the point that there is no instance in the 50 years since Bermuda’s constitution was adopted that the UK has imposed parliamentary legislation on the island, and also notes that the actions of Parliament are designed for the Carribbean and Bermuda only, while the crown dependencies which are geographically close to Britain – Jersey, Guernsey and the Isle of Man – were exempted from it.

So what’s the next step in the dispute between the territories, who will fight the imposition of this law tooth and nail, and the British Parliament, who has declared it has the authority to issue such a decree? It’s hard to say, as it’s fairly unchartered territory for UK legislation to affect the British overseas territories in this way. It’s likely that if it were to take affect, the territories’ fears would come true and much of the business of establishing companies on the islands would dry up. It’s likely that other offshore centers would reap the benefits and receive much of the business that the British overseas territories currently have. The British crown dependencies of Jersey, Guernsey and Isle of Man shouldn’t be too comfortable either, as some members of Parliament have indicated that, through they were exempted from this legislation, they expect those jurisdictions to publicly open up their registers, and if they don’t, the UK Parliament may enact similar legislation for them. Only time will tell how this already contentious issue will be resolved.

If you are looking for other jurisdictions that don’t have the problems with privacy that the British overseas territories are facing, please consider a company establishment in the Cook Islands or Nevis. There is no publicly available registry for entities in these countries, and clients can know that their laws will enable your privacy to remain intact. Please contact Southpac Group to discuss a Cook Islands or Nevis company establishment and learn more about the protection that these jurisdictions offer.

Get In Touch Today

Please fill the contact form below and one of our team will contact you shortly.



X
Contact Us