It has been a long time coming (draft legislation was released in 2018 and was expected to come into force last year). However, it appears that the long awaited register of beneficial ownership of overseas entities owning UK property (or the "PSCOC" register as it has become known (Persons with Significant Control of Overseas Companies)) is finally going to come into force shortly.
You will no doubt have already read that this has been portrayed as part of a clampdown on Russian oligarchs. However, the legislation has been proposed for quite some time and its reach is obviously far wider than simply targeting Russian money.
The legislation is to be found in the Economic Crime (Transparency and Enforcement) Bill which had its first reading in the Commons yesterday. A date for its second reading is yet to be announced. However, given the press releases from the Government and the political will to react to Putin's invasion it seems likely that this will be pushed through the Parliamentary process as soon as possible.
The text of the draft legislation going through Parliament shows little material change from the 2018 draft legislation previously released, although we will prepare a more detailed article going through the provisions once the legislation is finalised.
In the meantime, for a more detailed summary of how the register will operate, please see my article from last year summarising the position based on the 2018 draft legislation (UK Real-Estate and the Register of Foreign Owners: new registration requirements (burges-salmon.com)). However, the highlights are as follows:
- The Register applies to overseas entities (non-UK companies and other registered bodies with legal personality that can own property in their own right).
- An overseas entity that already owns UK property (or acquires UK property) needs to report information about its beneficial owner/s.
- The definition of beneficial owners is copied from the definition of PSC ("Persons with Significant Control") which applies to reporting for UK companies and LLPs and the main aim of the legislation appears to be to put foreign companies/entities owning UK property on a level playing field with UK companies/entities when it comes to beneficial ownership reporting.
- The reported information will be maintained by Companies House and will, for the most part, be public in much the same way as the PSC register for UK companies.
- Foreign entities will have 18 months to comply with the reporting requirement if they own property in England on the day the legislation comes into force.
- Going forwards the information will need to be reviewed/updated annually within 14 days of the date the entity first registered.
This is obviously going to result in an additional level of compliance for foreign entities/companies owning UK property and the consequences of failing to comply are potentially very severe as failure to keep on top of the reporting requirements is a criminal offence.
We will be publishing a more detailed article on our website once the legislation is finalised. However, please do get in touch with me or my colleague Emma Heelis-Adams if you have any questions in the meantime.
As the government acts to squeeze Russian oligarchs in the wake of Vladimir Putin’s invasion of Ukraine, Boris Johnson has promised to rush forward plans for a new public register, revealing the ultimate owners of properties across the UK.