January 31 saw the deadline for registration on the UK’s new Register of Overseas Entities, a publicly accessible register showing details of individuals who own or have control of overseas-incorporated companies that hold UK land.
So, what is the background to the ROE, how does it work, and what is the recent EU case on public access about?
The idea of “beneficial” – ie economic – ownership registers is not new. Jersey, for example, has had a register in one form or another since 1989. This has developed through the years and many other jurisdictions have followed by introducing their own.
The records from one jurisdiction could be accessed by certain authorities from other jurisdictions under a network of information exchange agreements; for example, when investigating tax evasion or other financial crime.
The UK in fact also has a register of “persons with significant control” of UK companies, introduced in April 2016. This has a key difference to the traditional version in that it was open to the general public.
A year prior to this, in 2015, as part of the general transparency drive to tackle money laundering and terrorist financing, the EU introduced a directive extending this idea to EU states.
The directive, in its original form, required beneficial ownership information to be made available to competent authorities, various others, and “any person or organisation that can demonstrate a legitimate interest”.
However, the definition of legitimate interest proved difficult and for this reason the directive was amended in 2018, with the qualification being dropped. Instead, the registers would be open to “any member of the general public”.
Broadly speaking, the idea of having beneficial ownership registers themselves was ultimately considered acceptable to most, as there was recognition that transparency initiatives are needed to reduce financial crime and money laundering.
What has been more controversial is the requirement for personal information to be accessible to any member of the public, without this person needing to give a reason or register themselves.
Residential addresses on the ROE are not made public, though where the individual concerned lives at the property held by the company, this may be of little comfort to them.
Keeping details of where they live off a public register is why a lot of people, particularly high-profile individuals, traditionally bought homes through a company in the first place. It does not usually save tax – in fact, it tends to lead to more tax than direct personal ownership.
The individual’s nationality is on the register, as is their date of birth – though only the year and month.
Although the UK soon knew it would cease to be part of the EU, it pressed on with developing its own laws to implement the ROE, and imposed great pressure on Crown Dependencies and Overseas Territories to make their own registers public too.