Draft bill published for consultation with details of a new public register of beneficial owners of overseas entities that own UK land.
The Department for Business, Energy & Industrial Strategy (BEIS) has launched a consultation on the Draft Registration of Overseas Entities Bill, which sets out provisions to establish a new public register of the beneficial owners of overseas entities that hold UK land. The proposed new rules are similar to those for UK company beneficial ownership which are provided by the existing People with Significant Control (PSC) regime. The Government intends that this register will be operational in 2021. The aims of the new foreign entities register are to prevent and combat the use of land in the UK by overseas entities for the purposes of money laundering and to achieve greater transparency in the UK property market. This register was initially proposed in 2016 following the Anti-Corruption Summit held in that year.
The Bill would require, in certain circumstances, an overseas entity that wishes to own land in the UK to take steps:
If this is not done, registration of UK land transfers and dispositions will be refused at the land registry (preventing such entities from becoming the legal owner of land, selling or leasing land or creating a charge over land).
The penalties for non-compliance are significant. Failure to register or to perform the annual confirmation/update will be punishable with a two-year jail sentence. Individuals who try to sell or lease property without first registering beneficial ownership will be liable to a five-year prison sentence and an unlimited fine.
Trusts will not be included on the beneficial ownership register. Within the impact assessment ( published alongside the draft Bill, paragraph 36 states: “As was set out in our response of March 2018 to the call for evidence on the register, and consistent with the commitment made at the 2016 Anti-Corruption Summit, we do not consider that trusts should be included on the register. Trusts do not have legal personality in their own right and so are not capable of entering into contracts. They are also commonly used for reasons including protecting assets for children and vulnerable adults, meaning that legitimate grounds exist for ensuring that information on the beneficial owners of trusts is not made publicly available.”
These proposed new rules will be of interest to overseas legal entities (or the beneficial owners of such entities) that either are considering buying UK property or already own UK property and their advisors, including estate agents, conveyancing solicitors and service providers for overseas legal entities.
BEIS is seeking views on these proposals, including whether any types of overseas entities should be exempt from the register. The consultation closes on 17 September 2018.
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