A public register of beneficial ownership of overseas companies holding UK property: further developments

By way of background, the Department for Business, Energy & Industrial Strategy (BEIS) published a call for evidence on 5 April 2017 containing proposals for a public register of beneficial ownership of overseas companies holding UK property. See our earlier comment here.

BEIS has now published a further document setting out how it plans to implement the register in light of the responses it received.
Some of the key decisions are as follows:
  • All legal forms that can hold property will be included, excluding trusts (and with scope for further exemptions).
  • Rather than including leases over 21 years, as originally proposed, the criterion will be whether the leasehold interest in question is one that is required to be included on the Land Register.
  • The definition of ‘beneficial owner’ will be aligned with the definition of people with significant control (PSC) in the existing PSC regime for UK companies (with various adaptations for entities that are not similar to UK companies), and the information required in respect of each such person will be as for the existing PSC register.
  • The original proposal was that overseas entities that already own UK property should have a year to comply with the new requirements. This period will be extended, but the Government has not yet decided by how long.
  • The original proposal was that the transfer of a beneficial interest in a UK property to an overseas legal entity that was not registered should be prevented by voiding the transfer document. The Government now proposes to allow the transfer of a beneficial interest, but not of legal title.
  • The Government is considering increasing the frequency of the requirement to update information on the register from its initially proposed period of every two years, but has not yet decided on the best approach.
  • Despite some objections from respondents, the Government intends to introduce a system of statutory restrictions and of putting notes on the relevant land register to enforce compliance with the new regime, backed up by criminal sanctions.
Following this published response, the Government will develop legislation with a view to publishing a draft Bill for scrutiny this summer and will introduce the Bill itself in Parliament early in the second session (i.e. in 2019). It proposes that the register will be operational in 2021.

A link to the Government’s initial call for information can be found here and the response document can be found here.

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