Unmasking the truth, who owns the UK’s properties?
A new register of beneficial owners of overseas entities owning UK property – what you need to know about the proposals
Why the new regime? The London property market is awash with overseas investors. The UK government is concerned that the UK property market may be used to hide illicit funds and launder proceeds of crime through the use of opaque overseas structures. UK companies are obliged to maintain good disclosure of both legal ownership and ultimate beneficial ownership. The government hopes that by making beneficial ownership information of overseas corporates holding UK property publicly available it will both increase market confidence and reduce the risk of UK property being used for illegal activity.
What has the government done so far to increase transparency of ownership by UK
companies? In April 2016 the government introduced a new Part 21A of the Companies Act 2006 which effectively extended beneficial ownership rules to all UK companies, LLPs and societas Europaea. Almost every company must now create and maintain a register of the name of persons with significant control (PSC Register) or the registrable relevant legal entities. The information contained on a company’s PSC Register is publicly available and free to access on the Companies House website.
The specified conditions (as set out in Companies Act 2006)
Condition 1: Ownership of shares Condition 2: Ownership of voting rights
Condition 3: Ownership of right to appoint or remove directors
Condition 4: Significant influence or control
Condition 5: Trusts, partnerships etc. 10
What is the government doing to increase the transparency of ownership by overseas
companies? To ensure a level playing field for UK and overseas entities the government has proposed a further register of beneficial ownership for all overseas companies and legal entities that own or wish to own UK properties or that wish to engage in significant government procurement contracts. It is likely that the government will apply the same test as under the PSC Register.
How will the new register work in practice? The proposal is that a new register will be created for all overseas companies and legal entities who own or wish to own a significant property interest: the call for evidence suggests a lease of 21 years or more, but this is likely to be refined as the proposal develops. There are approximately 100,000 properties which are currently registered to overseas proprietors.
Dealing with both the Land Registry and Companies House
The Land Registry knows who the overseas owners are. There will be an implementation period in which the Land Registry will need to write to all of the overseas owners advising of the new
Summary description directly or indirectly holds more than 25% of the share capital directly or indirectly holds more than 25% of the voting rights
directly or indirectly holds the right to appoint or remove the majority of the board of directors
has the right to exercise or actually exercises significant influence or control
has the right to exercise or actually exercises significant influence or control over a trust or firm that is not a legal entity, which in turn satisfies any of the above conditions
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