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Transparency and trust: getting to grips with the UK's three beneficial ownership registers

Posted on 28 June 2022

As we discussed in the May 2022 edition of The Agenda, the UK's new register of overseas entities holding UK property is becoming a reality. While the register has not yet gone live and further detail is awaited on exactly how it will operate, in preparation we have been discussing with clients how the new register will compare and overlap with the UK's other two beneficial ownership registers (the PSC register and the Trusts Registration Service), both in terms of the information that is required to be submitted and the extent to which it will be made public. The below table provides a high-level comparison of the three registers. If you would like to discuss any of the information or disclosure requirements in more detail, please do not hesitate to get in touch.

  PSC register Register of overseas entities Trusts Registration Service
Register Register of people with significant control over UK corporate entities. Register of beneficial owners of overseas entities that own UK property. Register of beneficial owners of UK trusts and some non-UK trusts.
Who is it maintained by? Central PSC register maintained by Companies House and entity is required to maintain its own PSC register. Companies House. HMRC.
Date from which the requirements apply Since April 2016 for most UK companies and LLPs; since June 2017 for eligible Scottish partnerships and unregistered companies.

The legislation received Royal Assent on 15 March 2022, but is not yet in force.1When it comes into force, there will be a 6-month transition period for registration.

Since 2017 for taxable trusts; expanded to most other UK trusts and some non-taxable non-UK trusts in October 2020.
Is it public? Yes Yes No, but accessible by third parties in limited circumstances: (1) "legitimate interest" and "third country entity" requests for trust data; (2) obliged entities entering into a business relationship with the trust; and (3) law enforcement agencies.
Who is required to register? Most UK companies; UK LLPs; eligible Scottish partnerships; unregistered companies.

Non-UK bodies corporate, partnerships or other entities that are defined as a legal person under the law by which they are governed and which hold a “qualifying estate” in land (i.e. a freehold or lease granted for more than 7 years).

Where a property was acquired by an entity prior to 1 January 1999 and is still held by the entity, that entity is not required to register.

Subject to certain exceptions, trustees of: UK express trusts; non-UK resident taxable trusts; non-UK resident trusts directly acquiring UK real estate; non-UK resident trusts with a UK trustee entering into a business relationship with an obliged entity; unregistered pension trusts and trusts of pension death benefits; and complex estates.
Which beneficial owners need to be disclosed?

In relation to a company, a person with significant control (PSC) is a person who meets one of five conditions:

(1) holding more than 25% of the shares;

(2) holding more than 25% of the voting rights;

(3) holding the right to appoint or remove the majority of the board;

(4) holding the right to exercise, or actually exercising, significant influence or control (SIOC) over the company; or

(5) holding the right to exercise, or actually exercising, SIOC over a trust or firm the trustees or partners of which satisfy one of the other conditions.

Individuals are registrable as PSCs. Certain corporate entities that are "subject to [their] own disclosure requirements" (e.g., other UK companies) are also registrable.

A beneficial owner of an overseas entity is a person who meets one of five conditions:

(1) holding more than 25% of the shares;

(2) holding more than 25% of the voting rights;

(3) holding the right to appoint or remove the majority of the board;

(4) having the right to exercise, or actually exercising, SIOC over the entity; or

(5) holding the right to exercise, or actually exercising, SIOC over a trust or partnership the trustees or partners of which meet one of the other conditions.

Individuals are registrable as beneficial owners. Certain corporate entities that are "subject to [their] own disclosure requirements" (e.g., other UK companies or other overseas companies that are registered on the overseas entities register) are also registrable.

A beneficial owner of a trust is:

(1) the settlor;

(2) the trustees;

(3) the beneficiaries;

(4) where the individuals (or some of the individuals) benefiting from the trust have not been determined, the class of persons in whose main interest the trust is set up, or operates; and

(5) any individual who has control over the trust.

All beneficial owners who are individuals are registrable.
Key information required PSC's name, date of birth, nationality, service address, usual residential address (although this will not be public), which PSC conditions they satisfy and the date on which the person became a PSC.

Beneficial owner's name, date of birth, nationality, service address, usual residential address (although this will not be public), which conditions they satisfy and the date on which the person became a registrable beneficial owner.

Where a beneficial owner of the entity is a trustee, certain information about the trust needs to be provided to Companies House, although that information will not be made public.

For trusts that are liable for UK tax: (1) information about the trust, including its name, date it was set up and details of trust assets; and (2) information for each beneficial owner who is an individual, including their name, date of birth, national insurance number and role in relation to the trust (for example, settlor or beneficiary).

Trusts that are not liable to UK tax do not need to provide information about the trust assets, but will still need to provide details of the beneficiaries.
Updating requirements Information in relation to PSCs must be recorded on the entity's own register within 14 days of being confirmed and filed with Companies House within a further 14 days. Information must be updated on the company's own register if it changes (within 14 days of a confirmed change); and updates filed with Companies House within a further 14 days.

An overseas entity is under a duty to review and update the information on the register annually.

Transitional provisions will apply in respect of property disposals made since 28 February 2022.

Once a trust is registered on the TRS, trustees will have 90 days from when they become aware of any changes to update the register unless the trust is taxable, in which case the update needs to be made annually by 31 January.
Consequences of failure to comply

Entities and their officers and PSCs are subject to criminal offences.

A PSC's failure to provide information gives the entity the option of placing restrictions on the PSC's interests, so that, for example, voting rights, dividends and other rights are suspended.

Inability to dispose of the legal title to the UK property without confirmation that the requirements of the register have been complied with due to the HM Land Registry restriction on disposition which will be entered on the title to properties owned by overseas entities (unless an exception applies).

An overseas entity that acquires property cannot be registered as proprietor at HM Land Registry until it has registered its beneficial ownership, unless an exception applies.

There are also criminal offences for failure to comply.
Failure to register on time and failure to update the register are administrative offences.
Key legislation Companies Act 2006. Economic Crime (Transparency and Enforcement) 2022. Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.
  1. A similar register has been operational in Scotland since 1 April 2022.
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