In January this year we discussed a consultation launched by the Department for Business, Energy and Industrial Strategy on proposals to introduce a register of beneficial owners of overseas companies and other legal entities. The Government published its response in April (click here to see the response). We now have a much better idea of the shape of the proposed legislation.
A draft bill will be available this summer for review with the intention that the proposed register will be operational in 2021. It is anticipated that:
- all "legal forms" that can hold property will fall within the scope of the legislation (but there may be exceptions where beneficial ownership is already transparent).
- leases for a term of over seven years will be caught (rather than twenty-one years as originally proposed). The intention is to capture all leases of registerable duration.
- compliance will be driven by a system of restrictions and notes appearing on the title registers of the relevant properties.
- non-compliance will prevent the transfer of the legal (but not beneficial) title of the relevant property. It will therefore be imperative that overseas entities have a valid registration on the proposed register of beneficial owners of overseas entities at the point of completion or settlement.
- there will be a statutory requirement to keep the register up-to-date.
- these obligations will be enforced through the use of criminal sanctions.