On July 23, 2018 the Department for Business, Energy & Industrial Strategy (BEIS) published a draft Registration of Overseas Entities Bill that will require overseas entities desiring to own land in the UK to take steps to identify their beneficial owner(s) and to register them. With the Bill, BEIS also published an overview document which both provides an overview of the Bill and seeks views on how clauses within the Bill will be implemented in practice.
At the 2016 Anti-Corruption Summit in London, the UK Government made a commitment to establish a public register of beneficial owners of non-UK entities that own or buy UK property, or which participate in UK Government procurement over certain thresholds. The register of overseas entities will be held by the Registrar of Companies and will for the most part be accessible to the public, with the aim being to increase transparency and trust in the UK property market. Since the 2016 commitment, a call for evidence was issued in 2017 and a Government response was published earlier in 2018.
The Bill will require any overseas entity that wishes to own land in the UK to take steps to identify their beneficial owner(s) and to register them. Once registered in the register of overseas entities, an overseas entity will obtain an overseas entity ID and will be required to update its information annually, until such time as it successfully applies to be removed from the live register of overseas entities. In order to comply with the updating duty, the overseas entity will have to annually deliver updated information (or confirm that the information in relation to it on the overseas entities register is up-to-date) and statements required for registration and will have to have taken steps to identify registrable beneficial owners (including sending notices to such beneficial owners). Failure to provide an update on the information held on the register is an offence under the Bill, as is delivering (or causing to be delivered) misleading, false or deceptive information.
In order to register title to land, an overseas entity will have to be registered with Companies House and to have complied with the updating duty. Although registration is prima facie voluntary, the Bill provides that not doing so will result in: (1) an overseas entity being unable to register as proprietor of land in the UK (necessary for obtaining full legal title) via the three land registries of England and Wales, Scotland and Northern Ireland; and (2) certain dispositions made by an overseas entity registered proprietor being incapable of registration at the land registries. In practice, this means that a failure to register with Companies House, or to comply with the updating duty, will in most cases affect the ability of the entity to either sell or lease the land, or create a charge over it as any purchaser or lessee would be unable to register the disposition with the relevant land registry in any part of the UK and therefore be reluctant to transact with the overseas entity.
The Government has been considering how to deliver the central government procurement element of the policy to maximise its effect against corruption and money laundering. The Government has decided that the most effective way to achieve the required level of transparency is to require information about beneficial ownership as a condition of awarding contracts that meet certain conditions or thresholds. This information will be published under the provisions of this Bill.
The information about beneficial ownership that will be required for procurement purposes will, as a minimum, be equivalent to that proposed for the register of overseas entities, and it will be published in an equally transparency way. The Government is currently considering mechanisms including the Contracts Finder Service (currently used to publish contract award information) to achieve this.
Comments are requested by September 17, 2018. The Government anticipates that, following Royal Assent and the making of secondary legislation, the register of overseas entities will be operational in 2021.
(Overview Document: Draft Registration Of Overseas Entities Bill – 23.07.18)
(Draft Bill: Registration of Overseas Entities – 23.07.18)