Out-Law News 3 min. read
07 Apr 2017, 10:00 am
It is seeking views from overseas investors, property and transparency experts on how to set up the register, how to keep it up to date and what protections, if any, should be put in place to suppress personal information about the beneficial owners of UK property. Separately, the government will research the extent to which the new register would affect investment in UK property.
The new requirements would build on those already in place that require the owners and controllers of UK companies to be registered with Companies House, and would "increase transparency and investor confidence", according to Margot James, the business minister.
"The extension of transparency requirements, which UK owners are already subject to, levels the playing field and means we would know who owns and controls UK property wherever they are from," she said.
The register is intended to prevent the use of UK property in money laundering, a tactic that "investigators pursuing high level homey laundering continue to encounter routinely", according to the government. Since 2004, more than £180 million worth of UK property has been identified as the suspected proceeds of international corruption, and 75% of those investigated used overseas companies to hide the true owners of the property.
However, tax expert Paul Noble of Pinsent Masons, the law firm behind Out-Law.com, said that there were often legitimate reasons why wealthy property owners used corporate structures to register ownership.
"This step has come about through the government's desire to show the UK as a leading light in the fight against global corruption," he said. "However, many high net-worth foreign nationals and those with high profiles use overseas companies to protect their privacy, and the concern is they are portrayed in the same light as those that may have more than their identities to hide."
The consultation, which closes on 15 May 2017, sets out proposals for a new beneficial ownership register of overseas companies that own UK property or participate in UK government procurement. The register, which would be administered by Companies House, would operate across the UK and is intended to complement, rather than duplicate, similar proposals consulted on by the Scottish Government late last year.
The government intends to adopt the same definition of ownership control that governs inclusion in the register of persons with significant control (PSCs) over UK companies. This covers individuals who hold more than 25% of the shares or voting rights of the company; have the right to appoint a majority of directors of the company; or have the right to exercise or actually exercise significant influence or control over the company, trust or other legal entity.
Companies would have to pay a fee to register with Companies House, but the register would be free to view. The consultation does not propose any fees at this stage, but the government intends to ensure that any fees are "proportionate and will not materially affect property or procurement transactions". Entities that already own property would be given a year in which to either supply their information or dispose of the property, and the information would have to be updated at least once every two years.
The government is also seeking views on whether it would be appropriate to create a criminal offence for entities that have not complied with the registration requirements by the end of the transitional period. It is also considering making it a criminal offence to fail to keep the information on the register up to date.
The information to be included on the register would mirror that included on the PSC register. Individuals would be required to supply name, date of birth, nationality, country or state of usual residence, a service address, usual residential address, the nature of that person's control over the company and the date from which this control applied. Day of birth and usual residential address would not be publicly accessible.
Companies that are unable to obtain information about their beneficial owners or that do not have any beneficial owners under the statutory criteria would be able to record this information on the register. The same criminal offence for anyone who knowingly or recklessly provides false or misleading information to Companies House would apply to information supplied for the purposes of the new register.
Individuals would be able to apply to have their information suppressed from the register if they meet certain criteria, including risk of violence, intimidation or "elevated public safety risk" if they were associated with the property or if the beneficial owner is a minor or is of diminished capacity. Applications would be assessed by "an appropriate enforcement agency", and would only be successful where "the risk is credible and verifiable", according to the consultation.