Overview

The Beneficial Ownership Act 2017 (“the Act”) requires the identification of the beneficial owner(s) of certain legal entities incorporated in the Isle of Man. A beneficial owner, as defined in section 4(1) of the Act, is a natural person who ultimately owns or controls a legal entity to which the Act applies.

Ownership or control can be exercised via the following means:

• either whole or in part;
• through direct or indirect ownership;
• control of shares;
• voting rights;
• other ownership interest in that entity; or
• control via other means.

It applies regardless of whether the interest is held solely, jointly or severally.

Under the provisions of the Act, legal entities captured by section 5(1) are required to appoint a nominated officer. The nominated officer must be a natural person who is resident in the Island, or the holder of a licence issued under section 7 of the Financial Services Act 2008 which permits the holder to carry on the regulated activity (within the meaning of section 3(1) of that Act) of providing corporate services.

With the assistance of the legal owner and beneficial owners, the nominated officer must ascertain which of the beneficial owners are registrable and subsequently submit information pertaining to their 1) ownership and/or control, and 2) identity, to the Isle of Man’s Database of Beneficial Ownership (“the Database”). The information outlined in 1) and 2) is collectively the ‘required details’, as listed in section 11 of the Act. The nominated officer must take all reasonable steps necessary to ascertain whether the legal entity has any registrable beneficial owners.

A registrable beneficial owner is a natural person who owns or controls an interest in a legal entity which is greater than 25% of the total beneficial ownership of that entity. The Act makes it a legal requirement for the details of all registrable beneficial owners to be recorded on the Database.

The nominated officer must submit the required details of each registrable beneficial owner to the Database via the Companies Registry (Department for Enterprise) Online Services website, and preserve and maintain the required details and independently sourced information that verifies those details for the time period prescribed in section 13 of the Act.

Enquiries in relation to registering a beneficial owner may be directed to BOAEnquiries.DFE@gov.im.

Enquiries in relation to compliance with the Beneficial Ownership Act 2017 may be directed to beneficial.ownership@iomfsa.im.

Oversight and Inspection

Oversight

These notes are intended to provide a general overview of the Authority’s oversight functions and are not intended as a substitute for the Act. The Authority is responsible for overseeing compliance with the Beneficial Ownership Act 2017 and assessing whether relevant persons have met their obligations in accordance with the Act.

Relevant persons include:

• a legal entity to which the Act applies;
• a nominated officer;
• a legal owner;
• a beneficial owner;
• an intermediate owner; and
• a registrable beneficial owner.

Section 30 and Schedule 1 of the Act define the Authority’s oversight powers. This includes:

• inspections;
• investigations;
• requests for information;
• power to require information;
• search warrants;
• reporting of findings; or
• offences and the issue of civil penalties.

Inspections

The Authority conducts inspections in order to assess compliance with the Act. The Authority will contact the relevant person, such as the nominated officer, and advise them which legal entities have been selected to undergo an inspection. A date for an on-site inspection will be decided. This will typically be approximately 6-8 weeks following the initial notice of inspection, although this could occur at a shorter notice.

On an inspection, the Authority has the powers to inspect the appropriate books, accounts and documentation of the relevant person in order to ascertain whether the information obtained and recorded in relation to the legal and beneficial ownership and control of an entity - and the required details submitted to the Database - is adequate and accurate. This review will determine whether the relevant persons subject to inspection are compliant with the requirements of the Act.

The outcomes from the inspection will be captured in a draft report, which is subsequently issued to the relevant person. Where contraventions are identified, they will be detailed in the report. The relevant person will be accorded a two-week period with which to bring to the Authority’s attention any statements within the report which are factually inaccurate. The Authority’s officers will consider any comments raised during this period prior to issuing the final inspection report. Relevant persons should then take action to address any deficiencies highlighted within. A deadline will be issued which will state the date by when any remediation must be concluded. Firms may be subject to re-inspection at a later date so as to ensure that any contraventions have been satisfactorily addressed.

Non-compliant entities may be subject to a variety of measures in order to resolve any issues. They include, but are not limited to:

• an enhanced program of remediation;
• civil penalties;
• reinspection at a later date;
• referral to the Attorney General’s Chambers for the initiation of criminal proceedings; or
• the company being ‘struck off’ the Register.

Further information on the Beneficial Ownership Civil Penalties can be found here.

Where appropriate, further powers may be used when assessing compliance with the Act, including disclosure notices, search warrants, and powers to require information.

Review Process

If a relevant person is aggrieved by a decision of the Authority, it may seek a review by the Financial Services Tribunal.

This Tribunal is made up of individuals who are independent of both the Authority and applicant. The Financial Services Tribunal can confirm, vary or revoke the decision.

The Financial Services Tribunal Rules 2015, which can be found here, provide information on the appeals process. These Rules are established under the Tribunals Act 2006.

Any right of review (e.g. to the Financial Services Tribunal) will be explained to the applicant in the letter communicating the decision of the Board.

Beneficial Ownership Requirements and Obligations

The Beneficial Ownership Act 2017 (“the Act”) imposes obligations on various ‘relevant persons’, as listed above and in section 30(2) of the Act. This page sets out the different requirements for those relevant persons.

Please click the headings below for more information.