Thu | Mar 22, 2018

New companies law to unveil true owners of local firms - Registrar fears blacklisting if enactment delayed

Published:Wednesday | June 21, 2017 | 12:00 AMAvia Collinder
Judith Ramlogan, registrar of companies and CEO of the Companies Office of Jamaica.

Newly passed legislation that will serve to lift the veil on beneficial owners of offshore registered companies needs to be put into immediate effect if Jamaica is to avoid sanction, according to Registrar of Companies Judith Ramlogan.

Delay, she said, could lead to Jamaica's blacklisting by both The Global Forum and European Union, and a consequent reduction in international funding.

The Companies (Amendment) Act 2017 is awaiting the Governor General's signature followings its passage in both the House and Senate.

"The Companies Act was amended so that Jamaica will conform with international obligations in respect of transparency, accountability and good governance and accord with accepted international standards of tax transparency and compliance, detection of financial crimes and a governance regime conducive to foreign investment," said Ramlogan, who is also CEO of the Companies Office of Jamaica.

Specifically, the law was amended to mandate that local and foreign companies provide information on beneficial owners; place prohibitions on the issuing of share warrants; and mandate that companies retain records, including information on legal and beneficial owners, for a period of seven years.

Ownership in some local companies are held through offshore and other corporate vehicles, masking the identity of the beneficial owners. The amendment would require the shareholders of those corporate vehicles to be disclosed on Companies Office of Jamaica records.

"We now only require information on the legal owners. The beneficial owners are the people who really own the company," said Ramlogan.

Beneficial owners relate to the true owner of a company or the group of owners who decide company policy. Companies, on making their returns, will now be required to name the individuals who are the true shareholders.




The revised law also prohibits companies from issuing share warrants to 'bearer', which is an anonymous exercise in which the owner of the shares is not known unless they decide to come forward and sell the shares, Ramlogan said.

The penalty for failing to disclose beneficial owners is $500,000, and $3 million for issuing share warrants to bearer. The registrar said returns will be investigated for compliance.

The law governing companies is undergoing a comprehensive overhaul to address a number of administrative issues, but the amendments relating transparency were fast-tracked to meet deadlines mandated for Jamaica by The Global Forum, an international body that promotes tax co-operation and information exchange among tax administrations. It is a creature of the G20 to enhance exchange of information.

Jamaica has 12 double taxation treaties, but, according to the Global Forum's September 2010 Peer Review, only two of those pacts meet the international standard the Jamaica/Spain treaty; and the tax information exchange agreement with the United States.

Since the initial peer review report, Jamaica has made some gains and progressed to phase two review in 2013. The only outstanding matter at that point was an overhaul of relevant legislation, including those relating to tax administration, banking and the Companies Act amendments.

"A peer review occurs when another tax administration audits or assesses the health of your system based on international criteria," Meris Haughton, chief corporate communication officer of tax administration Jamaica (TAJ), explained to Gleaner Business.

"The Global Forum has set criteria. In the peer review, different countries assess each other against these criteria," she said, adding that the third review for Jamaica was held in early 2017. This report has not yet been submitted to The Global Forum.

Further information provided by another TAJ official, who spoke on condition of anonymity, said under the revised companies law, disclosure of beneficial owners now meets the international standard. Jamaica, she said, was given a 2017 deadline for compliance.

The TAJ official noted that banking laws have also been amended to bring them in line with anti-money laundering rules, with banks now required to provide account information to the tax authorities under confidential circumstances.