The Register of Overseas Entities requires non-UK entities that own UK land to register with Companies House (or the Scotland/NI equivalent as applicable), and to identify its “beneficial owners”. Although trusts themselves are not registrable as they are not entities with their own legal personality, corporate trustees of trusts that own (directly or indirectly) such overseas entities are registrable beneficial owners. Certain information about the trust must be provided, including details of “each beneficiary under the trust”.
My question is as to the meaning of “each beneficiary under the trust” (Part 5, Schedule 1 ECTEA 2022). Whereas the MLR regulations relating to the TRS make specific provision for classes to be identified as part of the registration (“which, in the case of a class of beneficiaries, may be done by describing the class of persons who are beneficiaries or potential beneficiaries under the trust”) and makes a specific distinction between classes and named beneficiaries (“any other individual referred to as a potential beneficiary in a document from the settlor relating to the trust such as a letter of wishes”), I cannot find such a distinction in the ROE legislation.
The ECTEA definition therefore appears to be considerably broader than the TRS definition, though the technical guidance doesn’t seem to address this point. The Excel document provided by Companies House to upload trust information only has a section for individual beneficiaries, not classes.
Therefore, I think either (a) classes do not need to be reported, which does not seem correct, (b) classes do need to be reported, but there is seemingly nowhere to do so, or (c) anyone who is a potential beneficiary by virtue of being within a particular class needs to be reported and their identity verified, which poses obvious challenges where there could be an infinite number of potential beneficiaries.
I would very much welcome people’s views on this as, although I have seen references in a couple of law firms’ briefing notes to the definition being wider than that for the TRS, there does not seem to be a concrete answer (unless I am missing it, which is entirely possible, and a pointer towards the answer would be welcomed!).
The rules seemed to be modelled (verbatim in parts) on the provisions of Part 21A CA 2006 (persons with significant control). The short answer to your specific question is that a potential member of a class is unable to fulfil (as “X”) any of the conditions in para 6 of Schedule 2 ECTEA 2022. Such a person can only be a living individual or a legal entity.
The dreaded “look through” Condition 5 is the same as that which gave trustees such problems as regards PSCs. So under it a settlor, beneficiary or indeed anyone who fits the bill can be a “beneficial owner” just as they could be a PSC. My clients were forced to accept that a protector of an offshore trust qualified (rather than challenge the point in law). This despite the fact that the role, powers and duties of such a person are not homogenous across trusts. The main issue was where the principal role and powers were designed to prevent trustees misbehaving. While their influence was negative it was still “influence”. The non-statutory Guidance is almost identical in this regard to that for PSCs and indeed has a hyperlink to it on page 13!
I agree regarding being unable to fulfil any of the para.6 Sch.2 conditions if considering whether an individual is a beneficial owner, but para.8(1)(d) Sch.1 regarding the information to be provided in respect of trusts only sets out that the information to be provided on “each beneficiary under the trust” is “the information that would be required […] if the beneficiary were a registrable beneficial owner in relation to the overseas entity” - rather than it being contingent on the beneficiary also being a beneficial owner in their own right under part 2 Sch.2.
If they intended the scope to be the same as the TRS, I don’t know why they wouldn’t use the same (relatively clearer) definition; but if they intended the scope to be wider, I don’t know why they wouldn’t specifically highlight so in the guidance! Or am I giving too much credit to HMT for knowing what they intended at all?
I don’t follow your assumption that anyone intended the system to be like TRS. On the contrary, it seems almost identical to PSC.
Why they want a trust that is a registrable legal entity to provide the extensive information they do want is beyond me. It may be even more extensive than first appears. A trust which is not a legal entity is not required to provide details of any settlor grantor or beneficiary because it cannot be an overseas entity: s2.
An overseas entity, like a corporate trustee, is so required because a settlor grantor or beneficiary is deemed to be a registrable beneficial owner; and so is any person who has ever been a trustee but only if they were an actual registrable beneficial owner; and any “interested person” which is defined akin to Conditions 4 and 5 but not exactly. Settlor, grantor, beneficiary and trustee are not defined anywhere in the Act. Furthermore this information must apparently be divulged as regards each and every trust of which the overseas entity is a trustee.
Registration is not compulsory. It is voluntary but failure to register will impose restrictions on the ownership of UK land:s33 and Schs 3-5. If an overseas corporate trustee registers because one of its trusts owns UK land or intends to I do so not see why it should have to disclose information about other trusts. But paragraph 8 of Sch 2 talks of “the” trust singular and if it is to be read as relating only to one trust at a time it should have made that clear.
Such a trustee can surely register only once and not multiple times for every trust of which it is a trustee: the register is a register of legal entities not trusts. The Explanatory Notes to the Act and the Guidance are of no assistance. Surely if a registration of a given entity is a once off event how can the information, initial and updated, be limited to those trusts only which do not want to be restricted under s33. The downloadable Trust Excel document at Register an overseas entity and tell us about its beneficial owners - GOV.UK seems to provide for multiple trust details to be provided.
This is a mystery to me I am afraid. If an overseas corporate trustee is required to provide multiple trust details and trustees who are not legal entities such as non-resident individuals are not, why is that so? Many such corporate trustees will be subject to their own disclosure requirements as Reg 14 of The Register of Overseas Entities (Delivery, Protection and Trust Services) Regulations 2022 acknowledges, and be otherwise regulated, whereas individuals will not.
I posed the following questions to BEIS:
"A corporate trustee is a trustee of multiple trusts. If it registers as an entity does it have to provide details of every trust of which it is trustee? Or does it have to register multiple times as and when required? s4 and para 8 Sch 1 seem to refer to “the trust” but it is entities that are registrable not trusts.
Why is it necessary to provide much more information where a corporate is a trustee than where the trustees are individuals and Condition 5 in para 6 of Schedule 2 e.g. trustee. and settlor, grantor, beneficiary, who are deemed to be registrable beneficial owners? Why are those terms not defined?"
BEIS referred me to the guidance and Companies House. This is the latter’s tremendously helpful answer:
"Dear Jack Harper
Thank you for your email of the 18th August 2022.
Unfortunately on this occasion we are unable to give you any advice regarding your query, please seek independent legal advice.
Yours sincerely
Mr A Mears
Operational Case Manager
Register of Overseas Entities"
They are operating the register but they either don’t know or won’t tell what information they require from a corporate trustee. Are they real?