- Transparency régimes abound and another one came into effect on 1 April this year. Importantly, this one has criminal sanctions for non-compliance.
- The title of the Regulations governing this new transparency regime hardly qualifies as transparent: the Land Reform (Scotland) Act 2016 (Register of Persons Holding a Controlled Interest in Land) Regulations 2021/85 (“the Regulations”). Nevertheless, one may yet glean that it is to do with land and the registration of interests in land (in a broad sense). The term “land” is used in the Regulations but covers not only bare land but houses and flats and other buildings.
The general idea behind the Regulations
- In Scotland ownership of land is registered in the official land registers (either the Land Register or the quaintly named Register of Sasines). The public may consult these registers to see who the owner is. But ownership may not always be the whole story. The person whose name appears on the land register as owner may, for various reasons, be bound to deal with it in a way which others require. In other words, dealings with the land may in effect be “controlled” by persons who have an interest (of one sort or another) in the land but whose names do not appear on the land registers. That is considered out of keeping with the current emphasis on transparency.
- The Scottish Government Policy Note on the Regulations explained the rationale for the Regulations as follows:
“The overarching purpose of the Regulations is to increase public transparency in relation to individuals who have control over decision-making in relation to land. They are intended to ensure there can no longer be categories of land owner or tenant [i.e. under a registered lease of more than 20 years] where, intentionally or otherwise, control of decision-making is obscured.”
The new Register of Controlled Interests in Land
- And so, in addition to the land registers, there is now a new separate register called the Register of Controlled Interests in Land (“the RCI”) with the aim of increasing transparency.
- Broadly speaking, a person who appears as owner on the land registers but is in fact “controlled” by others is required to provide certain information to the “Keeper” of the RCI about themselves and the others who may exercise control over any of their dealings with the land. In the Regulations the owner is generally referred to as “the recorded person” and the others in the background controlling the owner’s dealings are referred to as their “associates”.
Cases where another “transparency régime” already applies and so where the RCI will not
- As mentioned, the Scottish Government Policy Note said that the aim of the Regulations was “to increase public transparency”. But it was not to involve duplicating information which was already available on other public registers. Take, for example, the case of a UK limited company owning land. The company’s name appears on the land registers but of course the company is controlled by others (its directors and shareholders) whose names do not appear. But company law already requires certain details about those who are in control of a company to be publicly available.
- Accordingly, the Regulations do not apply to such companies and nor do they apply in other similar situations where the owners on the land registers are already subject to other “transparency régimes” including: charitable incorporated organisations; Scottish charitable incorporated organisation; most incorporated bodies; public authorities; and limited liability partnerships.
The five situations where the new Register of Controlled Interests in Land do apply
The RCI prescribes five situations where an owner of land may be controlled by others but the arrangement is not already subject to an existing “transparency régime”. Subject to some (considerable) simplification the five situations are as follows.
In what follows the person whose name appears on the land registers as owner is referred to as “the recorded person” and the person whose name does not appear is referred to as an “associate”.
Contractual or other arrangements
- Where the recorded person is an individual and has entered into a contract or arrangement with an associate who has significant influence or control over the recorded person.
General partnerships (i.e. ordinary partnerships under the 1890 Act or Limited Partnerships under the Limited Partnerships Act 1907)
- Where the recorded person is a partner in a partnership and an associate is a partner or is an individual with significant influence or control over the recorded person.
Trusts
- Where the recorded person is a trustee of a trust and an associate is a trustee or has significant influence or control over the recorded person or the trust.
Unincorporated associations
- Where the recorded person owns land on behalf of the members of an unincorporated body of persons and an associate is responsible for “the general control and management of the administration of the body” (e.g. the chair, treasurer and secretary as office-holders of the association).
Overseas entities
- Where the recorded person is an “overseas entity” and an associate exercises “significant control” over the entity. With certain exceptions “overseas entity” means a legal entity which is incorporated and governed by a non-UK law.
Note: This material is for information purposes only and does not constitute any form of advice or recommendation by us. You should not rely upon it in making any decisions or taking or refraining from taking any action. If you would like us to advise you on any of the matters covered in this material, please contact Ken Gerber: email ksg@mitchells-roberton.co.uk