Whilst there has been much media coverage of Brexit and the political wrangling over its negotiation, businesses both inside and outside the UK are having to seriously plan and consider their options for the future.
Businesses based in the UK are seeking to retain access to European markets, whether by establishing branches in EU countries or working with EU companies to broker terms post-Brexit. Businesses outside the UK, whether based in the EU or elsewhere, are concerned about the risks of losing access to the UK market and thus considering establishing UK companies.
In amongst this, since the Anti-Corruption Summit in 2016, the UK Government has consulted and issued proposals to combat money laundering and achieve greater transparency in the corporate and property sectors.
Since 2016, UK registered companies are required to provide information to Companies House about their ultimate owners and controllers, which is maintained by Companies House on a ‘Persons with Significant Control’ (PSC) register, which is publicly available via its website. The government now intends for the same rules to apply to overseas companies.
In July 2018, the draft Registration of Overseas Entities Bill was published, applying to all overseas entities that ‘own and control’ land in the UK or propose to do so. It provides for the creation of a publicly available beneficial ownership register, to be maintained by Companies House.
The definition of overseas entity is broad: “a non-UK registered body with legal personality that can own property in its own right”. It includes foreign companies and companies governed by non-UK law that are recognised as a legal person under that law, such companies in the Channel Islands, BVI, Cayman Islands and the Isle of Man.
Once this Bill comes into force, overseas entities wishing to buy freehold land or a leasehold estate for a term of more than 7 years in the UK will have to apply for registration at Companies House before completion, registering its beneficial owners.
For existing overseas entities that already own land, freehold or leasehold over 7 years, they will need to register with Companies House within 18 months of the Bill becoming law, and apply to HM Land Registry to add their ID number to their title; or, alternatively dispose of their property if they do not wish to register.
Once registered, the overseas entity will receive an overseas entity ID and will have to update its details annually.
A restriction will be imposed by HM Land Registry on any property where an overseas entity is registered as the proprietor. This means, unless an entity is exempt or has a valid registration ID number, the restriction will prevent it from selling a freehold, assigning or granting a lease of more than 7 years or granting a legal charge. Exceptions would include dispositions required by a court order or statutory obligation; made subject to contracts that pre-date the restriction or made by a registered mortgagor exercising its power of sale.
The draft Bill provides a number of penalties for non-compliance, including imprisonment and fines.
The Government intends the new register to become operational in 2021. You can track the progress of the Bill through Parliament here: https://bit.ly/2SRATPn
All our articles are intended for informational purposes only and do not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information provided.