What is the Definition of a ‘Beneficial Owner’?

A beneficial owner is a person or entity who enjoys benefits of ownership of a property or another type of asset. A beneficial owner can also be defined as an individual or an entity who owns or controls an asset. This can be different from legal ownership.

Why are beneficial owners required?

Since 2016, Companies House has required UK companies and other legal entities to provide the identity of who owns and controls a company. This is known as the ‘People with Significant Control’ (PSCs) register and it was established with the principal aim of preventing the misuse of UK corporate structures by criminals.

Although this legislation was effective in providing some greater transparency of UK property ownership, it still left some vulnerability around ownership transparency where UK property was owned by an overseas entity. For example, individuals were able to list their assets under a trust rather than naming themselves as the owner, which was a tactic deployed to make it easier to launder money by hiding the identity of the people benefitting from the assets.

On 1 August 2022, the Register of Overseas Entities (ROE) was launched by Companies House as part of the Economic Crime (Transparency and Enforcement) Act 2022. The new legislation requires overseas entities with ownership of UK property or land to identify their registrable beneficial owners.

One of the primary objectives for setting up the ROE was to combat money laundering, particularly where a company has a corporate structure with a lack of transparency of who the beneficial owner is. Another reason for introducing the ROE was to provide more transparency within the UK property market.

Who is considered to be a beneficial owner?

A beneficial owner of an overseas entity can be an individual, trustee or entity that meets one or more of the following conditions:

• They hold (directly or indirectly) more than 25% of the company shares
• They hold (directly or indirectly) more than 25% of the voting rights
• They hold the right (directly or indirectly) to appoint or remove a majority of the board of directors
• They have the right to exercise, or actually exercise, significant influence or control over the company

The regulations and requirement to identify beneficial owners has been applied retrospectively, so they apply to any overseas entities who purchased property or land on or after the following dates:

• 1 January 1999 in England and Wales
• 8 December 2014 in Scotland

Overseas companies who own UK property or land must understand their legal responsibilities, including the additional responsibilities to identify their beneficial owners. ProSec are authorised agents for the ROE which means we can register overseas entities on the new register.

Please contact us to find out more about how we can help you.