Improving the transparency of land ownership: consultation on draft regulations

Views sought on proposals to help people and communities engage with those who control decision-making.


Chapter 2 – Who we will be registering

41. Schedules 1 and 2 of the draft regulations set out the persons to be registered as 'associates' in the Register. Schedule 1 defines 'associate' for each category of person or entity to which the draft regulations apply. Schedule 2 sets out the entities that are out of scope and to which the draft regulations do not apply. Our proposals are set out in more detail at Chapter 2 of the draft explanatory document.

42. These draft regulations are intended to ensure there can no longer be categories of land owner or tenant where, intentionally or otherwise, control of decision-making is obscured.

43. The proposed draft regulations take account of existing legislation that can deliver transparency of land ownership, including land registration in Scotland, and corporate transparency including the UK People with Significant Control Register.

Part 1 of Schedule 1 - Contractual or other arrangements with an individual

44. This Part of the draft regulations concerns persons with contractual or other arrangements with an individual such as individuals who own land as a result of a contractual arrangement in which they own it on behalf of another person. This situation differs from the ownership of land as a trustee of a trust and is understood to be less common.

45. Our proposals are set out in detail at paragraphs 106-110 of the draft explanatory document.

Q 12. Can you provide examples where land is owned or leased by individuals subject to contractual arrangements such as those described in the explanatory document?

Q 13. Are there other contractual arrangements we should be looking to capture?

46. We have proposed that persons who have the right to exercise, or actually exercise, significant influence or control over the owner or tenant's dealings with the land be registered as associates.

Q 14. Do you have any comments on this proposal?

Part 2 of Schedule 1 - Partnerships

47. Scottish partnerships where all the partners are companies limited by guarantee, Scottish Limited Partnerships and Limited Liability Partnerships are all required to report information to the People with Significant Control Register. There are, however, no equivalent reporting requirements on Scottish partnerships where at least one partner is an individual or on general partnerships governed by English law. This Part of the draft regulations concerns land held by, or on behalf of, those partnerships.

48. Our proposals are set out in detail at paragraphs 111-124 of the draft explanatory document.

49. Partnerships under English law do not have legal personality and therefore cannot be the legal owner of land or holder of a lease on their own behalf. While Scottish partnerships do have legal capacity and can own or tenant land directly it is, however, understood that they frequently do not do so. In both cases, one or more of the partners will typically hold the land in 'trust' for the partnership. This arrangement may not be clear from an entry in the Land Register.

Q 15. Does this reflect how land is typically owned or leased by or on behalf of partnerships orCan you provide examples of other ways in which land is owned or leased by or on behalf of partnerships?

50. We have proposed that the following persons be registered as associates in relation to partnerships - a person who:
(i) is a general partner of the recorded person, but is not registered as owning or leasing the land;
(ii) is a general partner of another partnership which is (of itself) a partner of the recorded person;
(iii) is an individual who has significant influence or control over a relevant entity which is a partner of the recorded person; or
(iv) is an individual who has the right to exercise, or who actually exercises, significant influence or control over the recorded person or a partnership in which the recorded person is a partner.

51. We have set out that examples of significant influence or control will include persons who:
(i) have the right to unilaterally take or veto decisions about the governance or running of the partnership;
(ii) have the right to appoint or remove any of the partners of the partnership; or
(iii) are able to influence the decision-making of the partnership without holding a formal governance position within the partnership.

Q 16. Do our proposals reflect sufficiently how control is exercised over partnerships?

Part 3 of Schedule 1 - Trusts

52. This Part of the draft regulations concerns land held by a person as a trustee of, or otherwise on behalf of, a trust. Our proposals are set out in detail at paragraphs 125-142 of the draft explanatory document.

53. The explanatory document sets out our understanding of how land is typically held in trust under Scots law and the laws of other jurisdictions, and how such land is registered in Scotland. Our proposals are intended to be applicable to trusts constituted under Scots law, English law and the law of other jurisdictions. They are also intended to apply equally to public, private and charitable trusts.

Q 17. Do our proposals reflect how land is typically held in trust ?Can you provide examples of other ways in which land held in trust?

54. We have proposed that the following persons be registered as associates in relation to trusts - a person who:
(i) is a trustee of the trust, but is not registered as being the owner or tenant of the land;
(ii) is an individual who has significant influence or control over a relevant entity which is a trustee of the recorded person; or
(iii) is an individual who has the right to exercise, or who actually exercises, significant influence or control over the recorded person or the trust.

55. We have set out that examples of significant influence or control may include:
(i) persons who have the right to appoint or remove a trustee (other than by application to the court). This power may typically be provided for in the trust agreements of commercial trusts;
(ii) persons who have the right to direct the distribution of assets or funds, or to direct investment decisions of the trust. This may also be provided for in a trust agreement;
(iii) persons who have the right to amend the trust deed. We are not aware that this is a common formulation of trust deeds made under Scots law. It may, however, be used in trust deeds made in another jurisdiction to reserve a role for the truster in the running of the trust;
(iv) persons who have the right to revoke the trust. This may include of-age sole beneficiaries of a bare trust who can unilaterally revoke the trust; and
(v) persons who can influence the decision-making of the trust without holding a formal governance position within the trust.

Q 18. Do our proposals sufficiently capture how control is exercised over trusts including through financial interests?

Part 4 of Schedule 1 – Unincorporated Associations

56. This Part of the draft regulations concerns land held on behalf of the members of an unincorporated association. Our proposals are set out in detail at paragraphs 143-154 of the draft explanatory document.

57. Unincorporated associations do not have legal personality and therefore cannot own land in their own right. Typically, a trustee or trustees will hold the title to land on behalf of an unincorporated association – these are known as the property trustees. That they own the land on behalf of the unincorporated association may not, however, be clear from a Land Register entry.

58. Unincorporated associations are typically small bodies that may be charitable or voluntary in nature. Common examples include village hall associations, sports clubs and faith and belief groups.

Q 19. Do our proposals reflect how land is owned or leased on behalf of unincorporated associations? Can you provide examples of other ways in which land is owned or leased on their behalf?

Q. 20. Are there other types of groups than those mentioned who may be affected by these proposals? If so, please can you provide examples.

59. We have set out that an associate in respect of the owner or tenant in this situation would be a person who:

  • Is responsible for the general control and management of the administration of the body and is not recorded as the legal owner of the land.

60. In practice this will mean that the office holders within the management committee of the association, such as the chair or treasurer, be recorded as associates.

Q 21. Do our proposals sufficiently capture how control is exercised over unincorporated associations?

Part 5 of Schedule 1 – Overseas Legal Entities

61. This Part of the draft regulations concerns land owned or leased by overseas legal entities. Our proposals are set out at paragraphs 155-166 of the draft explanatory document.

62. Overseas companies which own land in Scotland will be recorded as the legal owner of the land or tenant of a lease and their name and registered address will be recorded in the Land Register. Where they are not subject to reporting requirements elsewhere the entity may be opaque with no opportunity to identify persons involved in its governance or decision making.

Q 22. Do our proposals reflect how land is typically owned or leased by overseas legal entities Can you provide other ways in which land is owned or leased by overseas legal entities?

63. We have set out that an associate in respect of an overseas legal entity be a person who:
(i) directly or indirectly holds more than 25% of the voting rights in the recorded person;
(ii) directly or indirectly holds the power to appoint or remove a majority of the board of directors of the recorded person (or if it doesn't have a board, the equivalent management body);
(iii) has the right to exercise, or actually exercises, significant influence or control over a partnership or unincorporated body which is not a legal entity or a trust, but in respect of which paragraphs (i) or (ii) would apply if the partnership, body or trust were an individual; or
(iv) otherwise has the right to exercise, or actually exercises, significant influence or control over the decision-making of the recorded person, particularly in respect of its dealings with the land. This is defined in more detail below.

64. We have also set out that examples of significant influence or control may include:
(a) a person has absolute decision rights or absolute veto rights over decisions related to the running of the business of the company;
(b) a person's recommendations are always or almost always followed by shareholders who hold the majority of the voting rights in the company; or
(c) a person is significantly involved in the management and direction of the company.

65. Paragraph 163 of the explanatory document in particular sets out how our proposals will apply to 'chains' of ownership in overseas legal entities.

Q 23. Do our proposals sufficiently capture how control is exercised over overseas legal entities? Are there other examples that you are aware of where control is exercised over an overseas legal entity?

Q 24. are there examples where transparency is lacking as to control over a legal owner or tenant of land that we have not taken account of in our proposals?

Schedule 2

66. Schedule 2 of the draft regulations proposes that categories of entities subject to other transparency regimes do not have to double report similar information in the new Register of Persons Holding a Controlled Interest in Land. This will apply where they are the owner or tenant of land. Entities listed in Schedule 2 may still be recorded as associates in respect of a legal owner or tenant of land.

67. In particular, the PSC register covers:

  • UK companies;
  • Limited Liability Partnerships;
  • Scottish Limited Partnerships;
  • Societas Europaeae; and,
  • Scottish general partnerships where all the general partners are corporate entities.

68. Each is required to register information about their people with significant control ( PSC). The definition of a PSC is included in the explanatory document.

69. Our proposals are explained in detail at paragraphs 167-180 of the explanatory document.

Q 25. Do you have any comments on the usefulness of the PSC regime in revealing control of corporate entities which own land in Scotland?

70. The draft regulations also propose that Scottish charitable incorporated organisations ( SCIOs) and charitable incorporated organisations ( CIOs) not be subject to the regulations. CIOs are the equivalent of SCIOs in England and Wales.

71. Any person can request that a SCIO provide them with the names and addresses of its trustees. On the basis that information about the control of the SCIO is already publicly available, the draft regulations do not propose that SCIOs report in the Register. CIOs follow similar structures and accordingly are also not required to report to the new Register.

72. Mutuals, including cooperatives and community benefit societies, are already required to report information to the Financial Conduct Authority for publication in their Register of Mutuals. Accordingly it is proposed that they are also not to be required to report information for inclusion in the new Register.

73. It is also proposed that public authorities to which the Freedom of Information (Scotland) Act 2002 or the Freedom of Information Act 2000 apply will not be required to report. These Acts apply widely to public sector bodies including Ministers, non-departmental public bodies, local authorities and health boards etc. In each of these cases, it is considered that the control of the organisation will already be transparent through legislation.

Q 26. Do you have any comments on our proposals to not require SCIOs, CIOs, mutuals or public authorities to provide information for inclusion in the Register?

74. Chapter 3 of the explanatory document summarises the impact assessments that we have conducted so far. A partial Business and Regulatory Impact Assessment and a draft Privacy Impact Assessment have been published as part of the draft explanatory document. We have considered whether a Strategic Environmental Assessment, Equalities Impact Assessment or Children's Rights and Wellbeing Assessment were required and concluded that they were not required at this stage. These considerations are set out in the draft explanatory document.

Q 27. Do you agree with the conclusions in the impact assessments?

Q 28. Are there potential impacts that we have not considered?

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