Date: 12/04/2022 | Business & Professional Services, Corporate
The effect of the new law is to require overseas entities that own or buy property in the UK to disclose details of their ownership on the ROE, which will be a public register.
If you are a non-UK legal entity with property in the UK, you will require to register. A legal entity is defined as any entity that is a legal person under the law by which it is governed. For example, it would cover a non-UK Company, a non-UK LLP or a non-UK partnership with legal personality.
The disclosure requirements apply retrospectively to any property purchased since January 1999 in England and Wales and December 2014 in Scotland and once the register goes live overseas entities have 6 months to apply for registration.
There are severe penalties for non-compliance with both civil sanctions, such as restrictions on registering a purchase or disposing of land, and criminal penalties including fines of £2,500 a day for failure to update the register and unlimited fines for making materially false statements as well as imprisonment for up to 5 years.
So, what will require to be disclosed on the register? The disclosure obligations are modelled on the PSC regime currently in place (Persons with Significant Control) which aimed to increase transparency in relation to the ownership of UK companies.
As is the case for the PSC register an overseas entity will need to disclose information on those persons:
Once the entity is on the register it will get an ID number and will need to update its details annually. The information supplied to Companies House will require to be verified but how that is to be done is not yet clear.
This new regime will bring registration requirements for overseas entities owning land in the UK into line with requirements to disclose who owns UK companies and work is ongoing to get up and running as soon as possible.
The aims of the new ROE register (and indeed the PSC register) are laudable but will it work or is it just political point scoring? Inevitably, this new register will not provide the transparency it aspires to for a variety of reasons: non-compliance, incorrect information being provided and wiggle room in the legislation. For example, if there are multiple owners of a non-UK company that owns land in Scotland, all of whom own less than 25% of the shares, then under the new legislation there is no-one who needs to register. That is just one example and so we must conclude that the new regime, while providing the public with some additional information and creating lots of additional work for overseas investors and their solicitors, will certainly not provide anything close to the whole picture.
If you have any questions about how the new requirement to register might impact you, please contact a member of our Corporate Team.
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