A new public register in Scotland – the Register of Persons Holding a Controlled interest in Land(RCI) – went live on 1 April 2022 and is potentially relevant for any property (land or buildings) in Scotland.
Failure to register the required information could lead to criminal penalties, with potential fines of up to £5,000.
Purpose
The purpose of the RCI is to increase public transparency in relation to individuals who have control over decision making in relation to land or buildings. The aim is that it should be possible to look behind every applicable landowner in Scotland, including overseas entities and trusts, to see who controls the property.
Which properties are affected?
All properties are potentially affected, including residential, commercial, agricultural, forestry, estates or bare land.
Which interests are affected?
Ownership interests are affected as are the interests of tenants under registered leases (leases over 20 years duration).
Does the RCI also apply retrospectively?
Yes. For example, if a property has been owned for several years prior to the go-live date of 1 April 2022, the RCI can still apply to that ownership.
What info will be registered in the RCI?
The RCI will contain information about persons who can influence or control owners and tenants of the property. It is the duty of the “Recorded Person” to notify the register of such persons.
Who are the “Recorded Persons”?
Any person or entity that is registered in the Land Register (or Sasines Register) as an owner or tenant of the property is referred to as a “Recorded Person”.
Who are the “Associates”?
Generally speaking, the “Associates” are any persons who have significant influence or control over a Recorded Person’s dealings with the property. In other words, the Associates are the people “pulling the strings” in the background. The RCI regulations go into detail on who is deemed to be an Associate in various scenarios of Recorded Person, namely, (1) individuals, (2) partnerships, (3) trusts, (4) unincorporated bodies and (5) overseas entities.
Notification duties
The Recorded Person has notification duties to (a) the RCI (for example, submission of name and address of any Associate) and (b) to the Associate (for example, inform the Associate that info has been provided to the RCI). The Associate also has notification duties (for example, to notify the Recorded Person of any changes in the relevant info).
Examples
Partnership
A partnership with three partners bought a property for the partnership business and they are named on the title. Two new partners join the partnership. The three original partners, as the Recorded Persons, must notify the two new partners to be “Associates” under the RCI regulations in respect of that property.
Clubs and other unincorporated bodies
If a club owns land in the name of two trustees but it has a committee which makes the decisions about the land, the named Trustees are the Recorded Persons who have a duty to notify the other members of the Committee to be “Associates”.
Trusts or unincorporated charities
Land is acquired in the name of two Trustees, a Trustee resigns and an additional trustee is appointed. The named Trustees are the Recorded Persons with a duty to notify the changes and the new Trustee is the Associate.
Overseas Entity
If, say, a Jersey registered company owns land in Scotland, there could be various categories of “Associate”, including any person who directly or indirectly holds more than 25% of the voting rights in that company or who otherwise has the right to exercise, or actually exercises, significant influence or control over the decision-making of that company.
Notification timescales
The timescales vary depending on the type of notification. For example, the Recorded Person must register the details of any Associates within 60 days from the date the association started (or within 60 days after 1 April 2022 for pre-existing associations). Likewise, if the relevant info changes (for example, if a new person becomes an Associate or an existing Associate ceases to be an Associate), the updated info must be registered within 60 days of the change occurring.
Exemptions
Recorded Persons who are already subject to another UK transparency regime will be exempt from the RCI requirements. For example, UK registered companies or LLPs are exempt (as Companies House already has transparency reporting requirements). There are also numerous other exemptions in certain scenarios.
Costs
It is free to register information on the RCI and it is also free to search the RCI. The RCI is operated online by Registers of Scotland.
Penalties
Failure to bring about the necessary registrations will be a criminal offence with possible fines currently up to £5,000. There will, however, be a grace period of one year starting on 1 April 2022.
How can we help?
If you have any queries on the RCI or are unsure if any notification duties apply to you, please speak to your usual MacRoberts contact, or contact us.
