UK: BEIS Publishes Draft Registration Of Overseas Entities Bill

Last Updated: 2 August 2018
Article by Jonathan Cantor and Emma Broad

More than two years have passed since David Cameron announced plans to introduce a public register of beneficial ownership of overseas companies owning property in the UK (the "Register"). Those plans are finally taking shape as the Department for Business, Energy and Industrial Strategy ("BEIS") has just published its draft Registration of Overseas Entities Bill. The Bill sets out a scheme for introducing a regime that will require overseas entities to register details of their beneficial owners if they want to own, let or dispose of land in the UK and includes stiff penalties for non-compliance. The Bill has generally been welcomed by campaigners for transparency in business.

The following are some of the key features set out in the Bill:

  • "Overseas Entity" has been defined as a legal entity that is governed by the law of a country or territory outside the UK and includes bodies corporate, partnerships and other entities that are legal persons under the law by which they are governed.
  • The Register is to be kept by Companies House and is to be available for public inspection (subject to limitations on the disclosure of certain sensitive information).
  • A beneficial owner (X) of an Overseas Entity (Y) is defined as a person or other legal entity that satisfies one or more of the following conditions:

    • Condition 1 – X holds, directly or indirectly, more than 25% of the shares in Y;
    • Condition 2 – X holds, directly or indirectly, more than 25% of the voting rights in Y;
    • Condition 3 – X holds the right, directly or indirectly, to appoint or remove a majority of the board of directors of Y;
    • Condition 4 – X has the right to exercise, or actually exercises, significant influence or control over Y;
    • Condition 5 – (a) the trustees of a trust, or the members of a partnership, unincorporated association or other entity, that is not a legal person under the law by which it is governed, meet any of the conditions above (in their specified capacity as such) in relation to Y and (b) X has the right to exercise, or actually exercises, significant influence or control over the activities of that trust or entity.
  • Not all beneficial owners need to be registered – Schedule 2 of the Bill sets out the circumstances in which a person or entity will be exempt from registration.
  • Once registered, an Overseas Entity will be under a duty to update the Register every year.
  • The Bill envisages two key methods of enforcement – restrictions on the Overseas Entity's ability to acquire and dispose of property in the UK and criminal liability for breach.
  • For properties in England and Wales, a "Qualifying Estate" means either a freehold interest or a leasehold interest which was granted for more than seven years. The Bill sets out various restrictions on Overseas Entities dealing with Qualifying Estates:

    • firstly, an Overseas Entity will not be able to make an application to register itself at the Land Registry as the registered proprietor of a Qualifying Estate unless it is on the Register or it is exempt from the registration requirements;
    • secondly, on registration at the Land Registry the Land Registrar must enter a restriction against the title to any Qualifying Estate if it is satisfied that the registered proprietor is an Overseas Entity which registered its interest by an application made on or after 1 January 1999. The obligation to register this restriction applies regardless of whether the Overseas Entity is exempt or not. The restriction will prohibit the registration of any transfer (including the assignment of a lease that was granted for a term of more than seven years), the grant of a lease for more than seven years or the grant of a legal charge ("Restricted Disposition(s)") of that Qualifying Estate unless:

      • the entity is a registered Overseas Entity, or is an exempt Overseas Entity, at the time of the Restricted Disposition;
      • the Restricted Disposition is made pursuant to a statutory obligation or a court order;
      • the Restricted Disposition is made pursuant to a contract made before the restriction is entered in the Register; or
      • the Restricted Disposition is made in the exercise of a power of sale or leasing conferred on the proprietor of a registered charge or a receiver appointed by such a proprietor – this concession will come as a relief to lenders.            

    ("Exception Criteria")

    • thirdly, where an Overseas Entity that is entitled to be registered at the Land Registry as proprietor of a Qualifying Estate on or after the day on which the relevant provisions come into force makes a Restricted Disposition, that Restricted Disposition must not be registered unless one of the Exception Criteria is satisfied save that, if made pursuant to a contract, that contract must have been made before the Overseas Entity became entitled to be registered.
  • The Bill contains provisions to ensure that Overseas Entities which already own property also comply with the Register:

    • firstly, Overseas Entities that acquired Qualifying Estates and were registered as the registered proprietor at the Land Registry pursuant to an application made on or after 1 January 1999 will have an 18-month transitional period starting on the date the relevant provisions come into force ("Commencement Date") to either comply with the Register or establish their exempt status. Failure to comply will amount to an offence punishable by a fine and/or imprisonment for up to two years. However, the Overseas Entity could, instead, choose to dispose of its Qualifying Estate during the transitional period rather than comply with the Register;
    • secondly, before the end of the period of 12 months starting on the Commencement Date, the Land Registrar is under a duty to place a restriction against the title of any Qualifying Estates in respect of which the Land Registrar is satisfied that the registered proprietor is an Overseas Entity who became registered proprietor pursuant to an application made before the Commencement Date. The restriction will prohibit any Restricted Dispositions unless one of the Exemption Criteria is satisfied. However, that restriction will not take effect until the end of the period of 18 months beginning on the Commencement Date so, again, the Overseas Entity may choose to dispose of its Qualifying Estate within this period.
  • The Bill introduces stiff penalties for non-compliance including both fines and potential prison sentences. For example:

    • the most serious offence under the Bill occurs where an Overseas Entity makes a registrable disposition of a Qualifying Estate in breach of one of the imposed restrictions on Restricted Dispositions. A person found guilty of this offence is liable to a fine and/or up to five years' imprisonment; and
    • those who knowingly or recklessly provide false information in response to an information notice (seeking details of beneficial owners) may be subject to a fine and/or up to two years' imprisonment.
  • Interestingly, a Restricted Disposition made in breach of the restrictions imposed by the Bill will still be deemed valid. The issue will be that if the Restricted Disposition cannot be registered at the Land Registry the disponee will not acquire legal title to the same – something that will be commercially unacceptable to most disponees.

BEIS is seeking views on the draft Bill. The full Bill can be found by following this link. The consultation closes at 5pm on 17 September 2018 and we know from announcements earlier this year that the government wants the Register to go live in 2021.

Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
11 Dec 2018, Seminar, London, UK

We are delighted to invite you to our breakfast seminar and Q&A forum on the people aspects of Brexit.

11 Dec 2018, Seminar, An Nijmegen, Netherlands

We are delighted to invite you to our breakfast seminar and Q&A forum on the people aspects of Brexit.

Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions