In this blog post we summarise the key proposals put forward by the government in its April 2017 consultation document setting out details of its proposed new public register recording beneficial ownership of overseas companies owning or wanting to purchase UK residential property.
Background
Since April 2016, UK registered companies have been required to keep their own register recording the person(s) who have significant control of that company (a PSC Register), and, since June 2016, UK companies have needed to deliver their PSC Register to Companies House at the same time as they file their ‘confirmation statement’ (which replaces the ‘annual return’).
Although this requirement is currently restricted to UK registered companies, the government has been moving towards greater transparency. In April 2017 the government published a consultation outlining its proposal to introduce a publically accessible beneficial ownership register in relation to overseas companies which own or purchase UK residential property.
Summary of key points in relation to the proposed register
the definition of ‘beneficial owner’ is to be based on that used to identify PSCs of UK registered companies for the purposes of the PSC register. At the moment the test for a PSC is someone who:
directly or indirectly holds more than 25% of the shares in a company;
directly or indirectly holds more than 25% of the voting rights in a company; or
directly or indirectly holds the right to appoint or remove a majority of directors of a company;
has the right to exercise, or they actually exercise, significant influence or control over a company; or
has the right to exercise, or they actually exercise, significant control or influence over the activities of a trust or firm, where the trust or firm meets one or more of the above conditions.
the register will be stored and maintained at Companies House in the UK and, crucially, all information will be freely available in the public domain;
an overseas company will not be able to buy, sell, charge or grant a long lease over a property unless it has conformed to the requirements under the register;
overseas companies already owning UK residential properties will be given a year to either register their beneficial ownership details, restructure their ownership, or sell their property(ies), if they do not wish to disclose such information;
the register will require the following details to be disclosed and therefore made publically accessible in respect of each beneficial owner, including their name, date of birth, nationality, address for service (but not their residential address), country or state were they usually reside and the nature of their control and the date that control was acquired;
if the company is registered in another country which has an ‘equivalent’ disclosure regime, disclosure of that information will not then be required under the UK’s register. It is not clear at this stage what qualifies as an ‘equivalent’ regime and whether a regime that does not make the information publically available will qualify as such;
‘safeguard’ provisions will be included to allow a beneficial owner to request that they are not named on the register or their details limited if, for example, they can show that disclosure of their details would lead to an increased public safety risk. This is a more expansive safeguarding regime as opposed to that in relation to the PSC Register; and
it will be an offence for anyone knowingly or recklessly to provide false or misleading information.
To date the Government has yet to publish its formal response to this consultation document and the measure remains only a proposal at this stage.
