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New Register of Beneficial Ownership For Overseas Investors

By HopwoodHouse
31 May, 2017

A new register of beneficial ownership information for overseas legal entities is being set up, which means Companies House will now hold the records of these investments.

The UK Government has been concerned about overseas property investment creating the potential for illegal activity. Therefore, the Department of Business, Energy and Industrial Strategy published a Call for Evidence on a Register of Beneficial Owners of Overseas Companies and other Legal Entities. The belief is that greater transparency will discourage criminals from money laundering in the UK and make the role of enforcement agencies easier.

Beneficial Ownership Beneficial ownership will be decided by a test which will be similar to the test for Persons with Significant Control. This establishes who holds more than 25% of the shares of companies, who controls the appointment or removal of the board and who exercises significant influence over the company. These rules will be adapted accordingly for individuals who hold rights or shares as part of a collective arrangement.

The required information includes the personal details of the beneficial owners as well as the specifics of the overseas entity itself. If the entity does not have any beneficial owners, then details of the managing officers will need to be provided. All information will need to be updated every two years and the Companies House registration will come with a fee.

Property Deals The new rules state that any overseas entities now need to obtain a registration number from Companies House when they register any beneficial ownership information. This number will be needed for the sale, long lease or mortgage of UK property investment already owned by them. It is also required should they wish to register in the relevant land register the purchase or acquisition of long leasehold interests in UK property.

The proposals have not yet been put in place, but when implemented they will affect all overseas entities, and not just companies. The Companies House registration number will need to be in place before certain property deals can be registered with the Land Registry. For those who have already owned or leased land or property for more than 21 years in the UK, the overseas entities will have 12 months to obtain a unique identifier number.

Non-Compliance The sanctions for any overseas entities who fail to submit and update their beneficial ownership information include a block on property sales, purchase, long leases and new mortgages. Any potential buyers or leasers will be alerted to the block, and criminal sanctions may be applied for entities who have failed to comply.

Interests In Scotland The Scottish and UK governments take different approaches in regard to controlling interests, or beneficial ownership, and the results of a Scottish Government consultation on proposals for a public register of controlling interests in land are yet to be published. The Scottish Government are more concerned with finding out who benefits from and controls the land, whilst the UK Government looks to reveal who ultimately controls the land-owning entity.



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