The government recently announced that they anticipate the register of beneficial owners of overseas entities being operational in 2021. At present, they are studying the comments on the draft Bill prior to publishing a response. The timeline then has the Bill being brought to Parliament early in the second session, followed by Royal Assent and the register being operational in 2021.
The report issued by the House of Commons and House of Lords Joint Committee on 20 May 2019 on the draft Registration of Overseas Entities Bill made several recommendations designed to provide transparency of ownership of UK property. There was some concern that the proposals did not go far enough and could be circumvented, for example, by submitting false information or using trusts.
The committee reported that approximately 86,000 properties in England and Wales were owned by companies in jurisdictions with high levels of secrecy. It is hoped that the register will help co-ordinate the fight against fraud and money laundering.
Amongst the recommendations are:
- to include a specific requirement to update the register before making any disposition of UK real estate, as well as to require overseas entities to update or confirm their beneficial ownership annually;
- to clarify the scope of overseas entities that are subject to the registration obligations, to limit exemptions and to introduce a pre-clearance mechanism for confirming before transactions are made whether a legal entity is registrable;
- to consider lowering the 25% ownership and voting thresholds in the draft definition of a registrable beneficial owner;
- to allow for systems to deter the submission of false information to the register and to delegate verification responsibilities to Companies House or regulated professionals; and
- to introduce civil penalties for overseas entities that breach their obligations, with the possibility of these being backed up by criminal sanctions for non-payment.