Northamptonshire Law Society
Registration Of Overseas Entities on real estate The publication of the ‘Pandora Papers’ has led to an increased focus on the transparency of the ownership of land in the UK and calls for the ‘Registration of Overseas Entities Bill’ to be brought before Parliament without further delay. Synopsis While they are required to be identified by those acting for them, there is currently no requirement for beneficial owners of UK land to be publicly registered. The draft Registration of Overseas Entities Bill would introduce a new public register of beneficial owners of non-UK entities owning UK land, similar to the PSC regime that applies to UK companies. What is the background to the Registration of Overseas Entities Bill? The proposal for a Register of Overseas Owners of land in the UK was first announced following the London Anti-Corruption Summit in May 2016. It sought to build on the ‘Persons with Significant Control’ (PSC) Register that was introduced for UK companies in April 2016. But progress on a register has been slow. What are the current registration requirements for land? Since 1862 the Land Registry has maintained a register of the legal owners of property in England and Wales and since 1990 it has been compulsory to register land on sale (and other ‘trigger’ events). However, this Register is intended as an aid to transactions and therefore seeks only to identify legal owners, able to deliver title to the land, not the beneficial owners who are of increasing interest to governments, tax authorities and the press. In addition, 14% of the land in England and Wales remains unregistered.
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What current requirements are there to identify publicly beneficial owners of land in the UK? Currently there is no public register of beneficial owners of land in the UK. What does the Registration of Overseas Entities Bill propose? The Bill establishes a framework for the Registrar of Companies to establish a Register of Overseas Entities. All Overseas Entities that own, or wish to purchase, land in the UK will be required to be registered before they are able to register their title or to dispose of the land. This will place a practical bar to dealing with UK land on any company not having complied (at least nominally) with the registration requirements. For existing owners, there will be a transitional period of 18 months from the date the law comes into force for the Overseas Entity to register as such (or dispose of the land). Failure to register within the 18-month window will be an offence committed by the overseas entity and every officer of that entity who is in default. The maximum penalty for the offence is imprisonment of up to two years plus a fine. There will be a new requirement for the Land Registry to enter a Restriction on the title of land owned by an Overseas Entity, so that dispositions of the land at a time when the overseas entity is not registered cannot be completed by registration at the Land Registry. After being registered, an Entity will be allocated an Overseas Entity ID by the Registrar of Companies.
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Within 14 days of each anniversary of the Overseas Entity’s registration, the Entity must deliver to the Registrar a statement updating or confirming the details required to be registered (for which, see below). If the Overseas Entity delivers this statement on an earlier date than required, then its next statement will be required within 14 days of the anniversary of that earlier date. Once again, failure to comply with this duty is an offence committed by the entity and every officer of the entity who is in default, although the penalties for this offence will not extend to imprisonment. Who must be registered? Five categories of person must be registered as beneficial owners, which closely mirror the PSC requirements for UK companies. These are: • A person who holds, directly or indirectly, more than 25% of the shares in the overseas entity. • A person who holds, directly or indirectly, more than 25% of the voting rights in the overseas entity. • A person who holds the right, directly or indirectly, to appoint or remove a majority of the board of directors of the overseas entity. • A person who has the right to exercise, or actually exercises, significant influence or control over the overseas entity. • Where the trustees of a trust, or the members of a partnership, unincorporated association or other entity, that is not a legal person under the law by which it is governed meet any of the conditions specified above (in their capacity as such), a person who has the right to exercise,
