Transparency of company ownership has been a priority of government in recent years with the aim of making the UK a world leader on improving corporate transparency. In 2016 the PSC regime came into force which applies to all UK incorporated companies (see our client note here). Back in March 2016 BEIS published a discussion paper which outlined a range of proposals to enhance the transparency of beneficial ownership of overseas companies owning UK property or engaging in UK central government procurement. A detailed call for evidence on these proposals was published on 5 April 2017.

Key elements of the proposal include that:

  • all overseas legal entities that are able to hold property or to bid on central government procurement contracts will be within the scope of the new regime. The government is considering how the regime will interact with the existing requirements under the Overseas Company Regulations 2009 which some affected companies will already be complying with. It will also look to exempt entities incorporated in jurisdictions which have equivalent disclosure regimes.
  • the government will apply rules similar to those under the PSC regime as regards how to identify beneficial owners, what reasonable steps an entity should take to do so and the required particulars that must appear on the publicly available register. Criminal sanctions will apply in respect of a number of failures to comply with the new regime
  • overseas entities which own or wish to acquire UK property must supply beneficial ownership information to Companies House and apply for a registration number. Registration of title to property will not be possible without that number. Overseas entities that already own UK property will have 12 months to comply and obtain a registration number. A restriction prohibiting the sale, long lease or legal charge of property where the overseas owner is not fully compliant with the overseas register requirement will appear on the title register
  • as well as freehold title, the registration requirement will apply in respect of leases that require registration and for which the initial term is at least 21 years
  • it should still be possible for legitimate lenders to enforce security over property, even where an overseas entity is in breach of the regime's requirements
  • the registration regime will apply to central government procurement in the same way as to property purchases – an overseas entity will need to have supplied its beneficial ownership information for the register in order to participate in central government procurement contracts. This regime will be mandatory for central government contracts and voluntary for wider public sector bodies such as local authorities.
  • information on the overseas register should be updated at least every two years and it will be an offence to fail to do so
  • given the likely association between beneficial owners and individual properties, a more extensive protection regime than that applicable under the PSC regime may be required to ensure that individuals are not put at risk because information about them is made public.

The call for evidence can be accessed here.  The last date for comments is 15 May 2017.