In response to Russia’s invasion of Ukraine the Government has taken the opportunity to fast-track a bill through Parliament (Royal Assent was granted on 14 March) which will force overseas entities that own UK land to disclose details not only of themselves but also their Ultimate Beneficial Owners (UBOs) on public record at Companies House. These would typically be trusts or companies holding UK real estate.
The impacted overseas entities will be companies, partnerships and any other legal person governed by a foreign law. Interestingly, trusts that directly own UK land are not included in these provisions. However, such trusts in any event should have registered by now on the UK Trust Register.
The definition of the UBO of an Overseas Entity that owns UK land aligns with the Persons with Significant Control which we are already familiar with in relation to companies. It includes a person who has:
- 25% or more of the shares or voting rights, or
- the ability to appoint and/or remove directors, or
- the ability to exercise significant control, e.g., through a contract
The new register will be publicly accessible through Companies House. Exceptions will be allowed on application; for example, home addresses may not be disclosed for some applicants. The Secretary of State can exempt persons from some or all of the requirements to register in very limited situations, for reasons of national security or for the prevention of serious crime. In addition, an application can be made to the Secretary of State for an order to allow the Registrar to refrain from publishing details of an UBO.
The date of commencement will be announced by The Secretary of State. Once announced the officers of overseas entities will have six months to file details about the overseas entity and the UBOs. Non-compliance will be an offence. Fines of up to £2,500 per day per officer can be levied for non-compliance. Officers are required to take reasonable steps to identify all registrable beneficial owners. If a reckless or false statement is made all officers are liable to a summary conviction which can result in imprisonment and/or a fine.
Registration is required where property has been transferred from 28 February 2022, and, once the date of commencement has passed overseas entities will not be able to transfer property if they are not registered.
It should also be noted that the legislation specifically refers to the sharing of data with H M Revenue & Customs, the UK tax authorities.
This will impact many offshore structures which have been put in place for privacy reasons and offshore fiduciaries and individuals owning property in such a manner should be aware of the implications that these changes may have.
The Registrar of Companies will be responsible for maintaining this register. Details of the actual registration process have not been announced, when they are this note will be updated.
If you would like to discuss how the above may impact you, please get in touch with your usual Blick Rothenberg contact or Richard Citron using the form below.