In an attempt to impose greater transparency on overseas corporate owners of UK property a draft bill, the "Registration of Overseas Entities Bill" was published on 23 July 2018 and is open for consultation until 17 September 2018.
The key feature of the plan is that any overseas entity (broadly a company or other corporate vehicle that wishes to own land in the UK (freehold land and leasehold interests granted for seven years or longer)) will need to identify their beneficial owner(s) and register them on a Register of Overseas Entities at Companies House. Where there is no beneficial owner, details of each managing officer must be given. Although this register will share many features with the existing Persons with Significant Control (PSC) register, it will be entirely new and separate from it. It is currently anticipated that the new register will be operational in 2021.
Once registered, an overseas entity will obtain an overseas entity ID. Without that ID, they will not be able to register as the legal owner of land with the UK Land Registries. Existing owners of land in England, Wales and Scotland and those which purchase property prior to the introduction of the register will generally be required to register at Companies House within 18 months of the commencement date. If offshore entity owners are unregistered, a restriction will appear on the title register, so that they would effectively be unable to sell or charge the land, as not only would the officers and/or beneficial owners of the unregistered entity face potential criminal charges, but the buyer or lender would not be able to register as legal owner or to register their charge.
Once registered, the entity will be required to update their information annually or to confirm that the information is still up-to-date. Failure to do so will not only be a criminal offence, but will result in a restriction being placed on the land register, making it harder to sell, lease or mortgage the land.
The term “beneficial owner” mirrors the equivalent conditions under the PSC regime, so that details of individuals or entities that directly or indirectly hold more than 25% of the shares or voting rights, or anyone exercising significant influence or control of the entity, should be included on the register. This may include details of trustees and those who exercise significant influence and control over the trust. Some beneficial owners will be specifically exempt from registration, so as to avoid the same entity or individual appearing on this register in relation to each entity in a chain of companies or on multiple beneficial ownership registers.
Although we now know the form that the transparency measures are likely to take, the precise details are still subject to change.