Corporate Transparency: The UK Accelerates Its Plans

N News

April 19, 2022

The conflict in Ukraine has prompted the UK Government to expand the sanctions list to include certain Russian banks and individuals.  It has also prompted an acceleration of plans to enhance corporate transparency.  

You may recall that we wrote about these plans in September 2020 here:-

Previous NCM post

At that time, we surmised that the UK Government was preoccupied with other matters and that the timescales for implementation were not clear. However, recent events have obviously changed things, and the UK Government recently published a White Paper outlining the next steps they intend to take:-

Corporate Transparency White Paper  

Amongst various other changes, the proposals include introducing a new requirement for all directors/PSCs/general partners to verify their identity with Companies House and changes to the way accounts are to be filed.  

 

The new Register of Overseas Entities

The UK Government has also pushed forward with the introduction of the Register of Overseas Entities (ROE) – through the Economic Crime (Transparency and Enforcement) Act 2022 which received Royal Assent on 15 March.

The ROE will apply retrospectively to UK land and property bought by ‘overseas entities’ since January 1999 in England and Wales, and since December 2014 in Scotland. 

‘Overseas entity’ is defined as ‘a legal entity that is governed by the law of a country or territory outside the United Kingdom’ (note that this definition includes e.g. entities formed in the Channel Islands). 

This new register will be held by Companies House, with support from the UK’s Land Registries. In essence, ‘overseas entities’ will need to register with Companies House and provide details of beneficial owners holding 25% or more of their shares or voting rights.  Once the Act comes into force, there will be a transitional six-month period for registrations to be completed.

 

The Scottish Register of Persons holding a controlled interest in land

What may be less well known is that the Scottish Government has also been pressing ahead with its own plans to introduce a new Register of Persons Holding a Controlled Interest in Land (RCI).  Its introduction is said to be a key part in the Scottish Government’s land reform agenda with claims that the new register will mean it “will be possible to look behind every category of entity in Scotland, including overseas entities and trusts, to see who controls land”.  

The RCI will be maintained by the Keeper of the Registers of Scotland (which are the Scottish property registers).

Owners or tenants (for more than 20 years) of land or property in Scotland will (unless they are exempt) have an obligation to supply information to the RCI where:-

1.     there is someone with ‘significant influence or control’ over that owner or tenant;

2.     the information on that person/those persons is not publicly available elsewhere (for example, from the PSC register at Companies House).

The RCI will be open for registrations this April, although it won’t be an offence to fail to make the necessary filings till April 2023. 

It’s clear the RCI will apply to (amongst others) overseas entities. It won’t apply to Scottish limited partnerships (because they are obliged to register a PSC) but it will apply (in principle) to English limited partnerships (because they are not - currently - subject to PSC requirements at Companies House). We write ‘in principle’ because the devil is in the detail, as evidenced by the limited partnership examples set out in the last link below. 

 

Crossover?

As it currently stands, it appears there will be a degree of duplication across both new registers. It’s therefore unsurprising that there are now calls for the Scottish Government to refine its plans for the RCI register so that entities which are registered on the ROE will be excluded from the remit of the RCI.  The Scottish Government has indicated that it is committed to avoiding double-reporting where possible and that a review will ‘take place in due course’.

Fund managers should follow these developments carefully, take legal advice where necessary and ensure any relevant filings are submitted within the deadlines (and indeed monitor any future changes to the ownership of any property which might trigger registration or variation of an existing registration).

 

Further information

For further information see:-

www.gov.uk - government-takes-landmark-steps-to-further-clamp-down-on-dirty-money

Fact sheet: The Register of Overseas Entities - GOV.UK (www.gov.uk)

www.ros.gov.uk - The Register of Persons Holding a Controlled Interest

ros.gov.uk/other-registration-types/rci

www.lawscot.org.uk - register-of-controlled-interests-when-will-it-apply