The Government has responded to the recommendations in the Joint Committee Report on the Overseas Entities Bill. The Government welcomed the Committee’s views, and responded on key points as follows:
- while taking the Committee’s point that the scope of defined terms must be wide enough to catch everyone intended to be captured, the Government, unlike the Committee, thinks the terms “overseas entity” and “legal entity” are widely enough defined. That said, it intends to publish guidance that should help. It also thinks it is not appropriate for a UK agency to decide what an entity’s legal personality is and says there is no need for a pre-clearance mechanism to assess whether registration is needed;
- it acknowledges the need for reform and resource at Companies House but warns some reforms will need primary legislation to achieve and therefore will take some years to process;
- all relevant parties will work closely together on the development of the Register to ensure it can be used properly by all who need to. It agrees with the Committee’s recommendation that there should be a “report it now” feature to allow users to flag suspicious or potentially incorrect information;
- the government is considering disclosure needs in relation to land owned indirectly by foreign governments. Generally, it is not in favour of listing particular types of entity that may be eligible for exemption on the face of the Bill;
- the Government will consider what criteria an “equivalent” register would need to meet;
- any overseas entity holding land on behalf of a trust will be required to register with Companies House, even though the trust itself will not – and the names of the trustees would be required. The Government also notes its plans to implement MLD5, and how its plans are intended to ensure discretionary trusts cannot be used to circumvent the requirements, but no entity will need to register twice. There is significant guidance planned on what is required from trusts, and appropriate deadlines;
- the 25% threshold seems appropriate for the time being at least;
- the Government will consider the best way to achieve accuracy and reliability of the Register and continues to consider the role regulated professionals, and the CDD they have already carried out, might play; and
- while it understands the attraction of civil sanctions, not least as criminal sanctions are unlikely to be enforceable overseas, it wants the criminal deterrent factor.