16 Jun BEWARE, AND BE AWARE OF, BENEFICIAL OWNERS
THE COMPANIES (AMENDMENT) ACT 2019 IS NOW IN FORCE
The Companies (Amendment) Act 2019 was proclaimed in its entirety as at 30th May 2019, by LN 112 dated 29th May 2019. This Amendment Act serves to amend the Companies Act, Chapter 81:01 with the primary objective of “unmasking … beneficial ownership” of companies. The Amendment Act seeks to achieve this in two ways:
- By prohibiting the issue of bearer shares, bearer share certificates, share warrants and bearer share warrants by companies incorporated, or by companies registered as external companies, in Trinidad and Tobago; and
- By ensuring that the ultimate beneficial owners of a company are disclosed and recorded in a company’s records and in the records of the Companies Registry.
In this Article, we focus on the latter.
Unmasking Beneficial Ownership Through Disclosure
The most significant and critical change introduced by the Amendment Act is the disclosure and reporting regime now in place in respect of the beneficial ownership of interests in a locally incorporated company.
This regime places obligations and criminal penalties for failure to comply with those obligations on: (a) beneficial owners; (b) shareholders; and (c) all companies incorporated in Trinidad and Tobago (and their directors and senior officers), save and except public companies which are exempted from the obligations relating to disclosure of beneficial ownership set out in the Amendment Act.
Of course, the first issue is who is considered a beneficial owner under the Amendment Act?
Who Is A Beneficial Owner?
In plain terms, a “beneficial owner” is a natural person who is the “ultimate owner” of an asset – that is, the individual who typically enjoys the benefits of ownership (including the exercise of control and the profits generated by the company). In circumstances where he/she cannot be identified, the natural person who exercise control or direction over a company will typically be treated as the beneficial owner. However, the Amendment Act sets out a detailed and somewhat complex definition of “beneficial owner” and it is critical that persons consider this definition themselves and seek legal advice where they are unsure as to the capacity in which they hold an interest in a company.
Obligations Relating to Beneficial Ownership
Some of the most significant obligations imposed on beneficial owners, shareholders and local companies (including their directors and officers) include:
- an obligation on each local company to determine the identity of, and obtain certain information in relation to, all persons holding a beneficial interest in such company. In order to assist companies in identifying their beneficial owners, the Amendment Act requires companies to issue a notice once annually to its shareholders requiring that certain information to be submitted by each such shareholder.
- an obligation on persons who previously held beneficial ownership in a local company to submit a declaration to such company.
- an obligation on beneficial owners and shareholders of a local company to submit a declaration to such company upon receipt of a notice from such company and, in the case of beneficial owners, upon becoming a beneficial owner of the company. Such declaration must disclose the nature of his/her/its interest in the company; and information surrounding the legal holder and the beneficial owner of the shares.
- an obligation on a local company to file returns with the Companies Registry in respect of, and to maintain a register of beneficial owners which records declarations received from shareholders or beneficial owners.
- an obligation on a local company to file a return with the Companies Registry in respect of the issue or transfer of shares in a local company.
Each of these obligations are required to be completed within prescribed timeframes, which interested parties should familiarize themselves with sooner rather than later. Of particular importance, the obligation on shareholders to submit a declaration to a company confirming the information noted at paragraph (c) above is required to be filed within 30 days of the commencement of the Amendment Act (i.e. by June 28th, 2019).
Where a person fails to comply with its obligations the Amendment imposes strict filing fee and criminal penalties, making an offender liable on summary conviction to (1) a fine of $10,000 and for every day in which the offence continues a further fine of $300.00; and (2) to imprisonment for 3 years. Where a company is liable, each director and officer of the company will also be liable for such penalties.
Notably, failure to make the required declaration will result in the beneficial owner being prevented by law from enforcing is or her rights of ownership in respect of his/her share(s), save for his/her rights to dividends which is preserved under the Act.
Companies (and their directors and senior officers), shareholders and beneficial owners all need to be aware of the new obligations imposed by the Amendment Act and have immediate work to do to ensure they are compliant.
As at the time of writing, the prescribed forms of the returns to be filed by companies and the declarations to be submitted by shareholders and beneficial owners have not been published by the Companies Registry. However, given the significant potential penalties of non-compliance, persons affected by the Amendment Act should still obtain all requisite information that they will require in order to comply. For example, in the case of shareholders and beneficial owners they should obtain and submit the prescribed information to the respective companies in which they hold an interest notwithstanding that the prescribed forms are not available.
Where you have uncertainty surrounding the capacity in which you hold an interest in a company, you should obtain legal advice as soon as possible to ensure that you are in a position to comply with any obligations now in force by the proclamation of the Amendment Act.
Disclaimer: This Document Provides General Guidance Only And Nothing In This Document Constitutes Legal Advice. Should You Require Specific Assistance, Please Contact Your Attorney-At-Law.
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