The relevance of controlling persons is important where the entity is a Passive NFFE, such as a trust (or a company) which isn’t professionally managed or where individuals are acting in a capacity as a trustee. A controlling person is anyone who in accordance with the Regulations exercise control over the trust, regardless of whether any of them exercises control over the trust.
Controlling persons in relation to a trust are:
- All settlor(s) who are alive at the time of the application
- All individuals acting as a trustee
- the protector if any
- All named beneficiaries, including a Discretionary trust where an individual is named as a discretionary beneficiary – provided they are alive at the time of the application.
Controlling persons in relation to any other entity – this includes shareholders who own or control more than 25% of the shares or voting rights or an individual who otherwise exercises control over the company. For example, an individual who exercises control over a company is where an individual has less than 25% of the shares or voting rights but who has a percentage ownership or voting right which is significantly higher than other shareholders. If an entity is owned by a different entity, then it is necessary to identify the different layers within the structure to identify someone who is a controlling person. Regardless of the corporate structure, there will always be a at least one controlling person.
Controlling persons in relation to a Partnership – if a Partnership is regarded as a Passive NFFE, the partners are named as controlling persons.