Register of Persons Holding a Controlled Interest in Land: Explanatory Document

Chapter 1

How the Register will work – Parts 1-5 of the Regulations

19. Parts 1-5 of the Regulations explain the functioning of the Register, the duties on persons to provide information for entry onto the Register, the role of the Keeper as registrar, how information in the Register will be maintained, and the non-disclosure of information in the Register in exceptional circumstances.

Part 1 – Introduction

20. Regulation 1 sets out that the Regulations will come into force on 1 April 2022. This will enable the Register to be operational from 1 April 2022.

21. Regulation 2 explains the meanings of terms used in the Regulations.

Part 2 – Register of persons holding a controlled interest in land

22. This Part sets out what information the Register is to contain, how and when entries should be amended or removed, and how people can search the Register for information.

The establishment and contents of the Register

23. Regulation 3 (Register of persons holding a controlled interest in land) provides that the Keeper must establish and maintain a Register known as the Register of Persons holding a Controlled Interest in Land ("the Register"). This regulation also sets out the information that the Register is to contain. Regulation 3(2) sets out that the Register will be a record of persons who own or are tenants of land and, in relation to that land, are associated with a person to whom Schedule 1 applies. Persons to whom Schedule 1 applies are referred to as 'associates'. Owners or tenants who have associates (with the result that there is an entry in the Register in relation to them) are referred to as 'recorded persons'.

24. Regulation 3(3) sets out that an entry in the Register is to contain:

• The name and address of a recorded person;
• The title number of the land or, where the land is not in the Land Register, a description of the land sufficient to allow it to be identified;
• Details of the capacity in which the recorded person owns or leases the land. (This would include, for example, where an individual owns the land in their capacity as a trustee);
• The required details in relation to each associate (these details are set out at regulation 10) or, where a security declaration has been made, a statement of that instead; and
• The date of any notice given to the Keeper in respect of the entry.

25. Paragraph (4) of regulation 3 sets out that the Register will be in a form considered appropriate by the Keeper, which may be electronic. This gives the Keeper latitude as to the form of the Register and ensures that an electronic system, like the existing Land Register, can be used.

26. In practice, regulation 3 therefore requires that each entry in the Register will be specific to a piece of land in respect of which there is some sort of controlling interest over the owner or tenant of that land. An entry will have an identifier relating to the land by which it can be searched. This identifier may be the Land Register title number (where there is one) or alternatively an address or other description of the land sufficient for it to be identified. It is also possible that the Keeper may elect to give a unique identifier in respect of each entry.

27. Entries in the Register will be in relation to land owned (i.e. where title to land is held) or a lease which can be registered in the Land Register (i.e. a lease of 20 years or more).

28. An entry will contain information about the owner or tenant of the piece of land (referred to as the 'recorded person') as well as information about the persons who are associated with the 'recorded person'. 'Associate' is the term used in the Regulations for the persons who hold a controlling interest in relation to a recorded person. The definition of an 'associate' is contained in regulation 3 and whether a particular person is an associate is determined by reference to the categories of persons described in Schedule 1 of the Regulations.

Making of Entries in the RCI

29. Regulation 4(1) requires the Keeper to make an entry in the register in accordance with regulation 3, following receipt of information provided under regulation 10(3) by a person to whom that regulation applies.

30. Regulation 4(2) requires the Keeper to make an entry no sooner than 30 days after receipt of the information in regulation 4(1). This will allow a standstill period for associates to be able to apply for a security declaration and for the Keeper to make a decision prior to any information appearing on the register.

Amendment of the Register

31. Regulation 5 requires the Keeper to amend the Register in certain circumstances. This is to ensure that the information in the Register be kept as accurate as possible.

32. Regulation 5(1) sets out that the Keeper must remove an entry from the Register if the previously recorded person is no longer the owner or tenant of the land, or if the recorded person no longer has any associates.

33. Regulation 5(2)(a) and (b) sets out that the Keeper must amend entries in the Register as they consider necessary if they receive: a notice under regulation 12 (relating to the updating of information in the Register), a security declaration, a notice under regulation 16 (relating to revocation of a security declaration), a notice under regulation 23 (relating to the death of an individual or winding up of a legal entity), or a security declaration ceases to have effect under regulation 17.

34. Regulation 5(2)(c) requires the Keeper to make such amendments to the Register as they considers appropriate if they "become aware of an inaccuracy" in the Register.

35. This is intended to enable the Keeper to amend the Register where there are clear errors in the material provided. This may be particularly helpful where a clear error has been made such as a foreign limited partner being registered as an associate when they cannot be so under paragraph 26 of Schedule 1 of the Regulations.

36. Regulation 5 does not prescribe how the Keeper may become aware of an inaccuracy but this could be as a result of being notified of an inaccuracy by a third party. The Keeper may correspond with persons to help her reach a conclusion. It is not, however, envisaged that the Keeper would investigate suggestions that there was or might be an inaccuracy in the register if the information provided to her did not disclose one.

37. It is recognised that there will be situations in which the Keeper is unable to conclude whether the Register is accurate or not on the basis of the information available to her, and there is therefore the need for other means of resolution.

38. Regulation 5(2)(c) does not give the Keeper power, or place a duty on her, to amend the Register to create an entry. There may be cases where there is not an entry in the Register in respect of a piece of land where it is believed that there should be one. Regulation 5(4) provides that the Keeper may request information that is relevant to any potential inaccuracy. It is not, however, intended that it should be the Keeper's role or duty in such cases to investigate or to create a new entry in the Register.

39. Where the Keeper is unable to reach a conclusion on the basis of the evidence presented to them, or where a question relates to whether an entry in the Register should be created, the Keeper or a third party can refer a question about the accuracy of, or lack of entry in, the Register to the Lands Tribunal. The Lands Tribunal has investigatory powers which enable them to consider complex cases, and to hold hearings into them, making them an appropriate body to determine issues that arise in relation to this part of the Regulations.

40. The process for referring a question to the Lands Tribunal is set out at Regulation 19.

Timing of making an entry or amendment

41. Regulation 6 requires the Keeper to amend an entry in the Register as soon as is practicable. These provisions are designed to ensure that the Register is as accurate as possible. In particular it means that when third parties alert the Keeper to any perceived inaccuracies in entries to the Register (section 5(2)(c)), they are under a duty to amend as they consider appropriate.

42. Regulation 7(1) requires the Keeper to allocate a unique reference number for each associate whose information is entered onto the Register. Regulation 7(2) provides that the unique reference number must appear in each entry in respect of that associate. For example, where one individual has been entered onto the register as being an associate of two different recorded persons, the same unique reference number would appear in each entry.

Protection of the Register

43. Regulation 8 provides for the Keeper to be responsible for ensuring the security of the Register and protecting it from interference, unauthorised access or damage.

Access to the Register

44. Regulation 9 sets out how people can access the Register and are able to search for information using certain criteria, namely, name and address of owner or tenant, title number of land or details of the associate, including the unique reference number.

45. This regulation sets out the means for persons to have access to the Register and the information it contains. It is intended that searching the Register is as easy as possible, and that only one of the criteria needs to be known to enable someone to search the register to find details of controlling interests in the owner or tenant of the land.

Part 3 – Duties to provide information

46. This Part of the Regulations sets out the duties on persons to provide information for publication in the Register, the information that they are required to provide and the offences that are committed in the case of non-compliance.

Duty to notify of controlled interest and associates

47. Regulation 10 sets out the duties which apply to persons who (a) own or tenant land and, (b) in relation to that land, are associated with a person to whom a Part of Schedule 1 applies.

48. Regulation 10(3) sets out that such a person must provide the Keeper with a title number or description of land sufficient for it to be identified, and the required details of the associate or a copy of a security declaration.

49. Regulation 10(4) sets out that where a person has more than one association to a recorded person in relation to the same piece of land, for example as a trustee and as holding an office or position in an unincorporated body, that they only need to provide their details once. This will remove unnecessary duplication and potential confusion.

50. Regulation 10(5) sets out that the person is required to take reasonable steps to verify the accuracy of the associate's required details with the associate, and to inform the associate about their duties and rights under the Regulations. These are:

• the timescales for responding;
• the offences for failure to comply;
• the right to make a security declaration; and
• the duty to inform the recorded person about any changes to their details.

51. Regulation 10(7) requires the person to provide the information to the Keeper within 60 days of the associate becoming an associate.

52. Regulation 10(8) provides that it is a criminal offence to fail to do this, unless the person has a reasonable excuse for not doing so.

53. Regulation 10(9) sets out that a person has a reasonable excuse if they have taken reasonable steps to establish whether they have associates or to verify details of the associate but have been unable to do so. They must also have given notice to that effect to the Keeper.

54. The references to 'persons' in Regulation 10 refer to the person who owns or tenants the land. This label applies until the information required by Regulation 10 is notified to the Keeper. Thereafter the owner or tenant is referred to as the 'recorded person', for example in Regulation 10 and elsewhere. These terms differentiate between the point before and the point after the required details have been notified to and are recorded by the Keeper in the Register.

55. A person will not become a recorded person if they consider under Regulation 10 whether they have an associate, and conclude that they do not in fact have one. In that case they would not notify information to the Keeper and would not become a recorded person.

Required details of an associate

56. Regulation 11 sets out that the 'required details' of an associate that must be provided by the owner or tenant (under regulation 10) must include the date when the association with the person who owns or tenants land began or a statement that such a date is not known.

57. Where the associate is an individual, the required information also includes:

• Their name;
• A contact address;
• Their date of birth (this will not be publicly available); and
• If applicable, the unique reference number previously allocated by the Keeper in terms of regulation 7.

58. Where the associate is a non-natural person,( i.e. an organisation or entity) other than a person of a type listed in schedule 2, the required details also include:

• Its name;
• Its registered number (if applicable);
• The address of its registered office or its contact details; and
• If applicable, the unique reference number previously allocated by the Keeper in terms of regulation 7.

59. Where the associate is a person of a type listed in schedule 2, the required details are:

• Its name;
• Its registered number (if applicable);
• The address of its registered office or its contact details;
• The paragraph of schedule 2 that applies to it; and
• If applicable, the unique reference number previously allocated by the Keeper in terms of regulation 7.

60. The intention of this regulation is that information suitable for the associate to be identified and engaged with is available in the Register. Where the person is subject to another transparency regime, their required details ensure that there is sufficient information to enable those registers to be searched to disclose the ownership and control structures for those persons.

Information about events affecting the Register

61. Regulation 12 sets out in a table who should do what when certain changes about information in the Register become known. Regulation 12(2) sets out timescales for the Keeper to be notified of changes and regulation 12(3) requires the recorded person to take reasonable steps to ensure the accuracy of the information.

62. The latter requirement to take reasonable steps reflects requirements of regulation 10(8)(a)(ii) and 10(8)(b) in respect of original notification to the Keeper about an associate. The offences and penalties for failure to comply also replicate those in regulation 10.

Notification of associates about registration

63. Regulation 13 sets out that, when information about an associate is provided to the Keeper for inclusion in the Register, the relevant owner or tenant must notify the associate this has been done. Regulation 13(4) sets out that a failure to comply with this regulation without reasonable excuse is an offence.

64. This regulation ensures that an associate is aware that the process of supplying information to the Keeper has been completed. This is important given that the associate is under a duty to provide information to the owner or tenant of the association (see regulation 14). Where the associate does not have notification under this section with 60 days of becoming an associate, the associate will want to take steps to ensure that the information is provided.

65. Failure to provide such a notice constitutes an offence.

66. The following diagram sets out the process of verification and notification.

Diagram Description

Diagram one outlines duties to provide information for inclusion in the register. The owner or tenant must contact the associate to obtain relevant information. The information required for the Register of Controlling Interests is set out in regulation 11 and the associate is required to respond to that request for information as set out under regulation 15. The owner or tenant must verify the information they receive from the associate before submitting it to the Keeper who enters it in the Register. The owner or tenant must notify the associate that their information has been provided to the Keeper.

Associate's duty to notify of association

67. Regulation 14 requires that where a person knows they are an associate of a person but have not received notification of this from the person (as required by regulation 13) within 67 days, then they must notify the person that they are an associate and provide their required details (the required details are set out in regulation 11). Regulations 14(3) and (4) set out the offences and penalty for not complying with this duty, which replicate those in Regulations 10 and 12.

68. This is intended to ensure that even when the person is not aware that they have an associate or are otherwise unable to identify an associate, then information about the associate will still be provided for inclusion in the Register.

Duty of associate to provide information on request

69. Regulation 15 sets out that a person (referred to as "A" in the regulation) who is contacted by a person under regulation 10(4) (that is, a person who may become a recorded person) must either confirm that they are an associate and that their details are correct, make a security declaration or inform the person that they are not an associate.

70. Regulation 15(3) and (4) sets out that if the details of an associate as recorded in the Register require to be changed, or if a person ceases to be an associate of a recorded person, then the associate or former associate must inform the recorded person of the change as soon as reasonably practicable.

71. Regulation 15(5) and (6) sets out that if a person receives a request under regulation 12(3) they must confirm the accuracy of their required information or provide the correct information if necessary. This will usually apply to existing or former associates. An offence is committed if these requirements are not complied with and the penalty is the same as that imposed under Regulations 10 and 12 (i.e. a fine not exceed level 5 on the standard scale (currently £5000)).

Security Declarations

72. Regulations 16 to 18 set out details for the making and revocation of security declaration, and for appeals against decisions about security declarations. The right to make a security declaration contained in these Regulations is intended to ensure that no-one is put at serious risk of violence, abuse, threat of violence or abuse or intimidation through the inclusion of their information in the Register. For example, this would be a mechanism by which victims of domestic abuse can prevent their information being disclosed in the Register. This mechanism is also intended to be suitable for use by persons who are at risk in relation to a position they hold which is relevant to the Register. This may be a refuge worker who would be registered as an associate as result of their position within the unincorporated association which runs the refuge. Regulation 4(2) provides for a 30 day standstill period before the Keeper enters information onto the public facing register. This allows additional time and safeguarding for an associate to apply for a security declaration.

73. Suitable evidence is required in support of any declaration to ensure that only legitimate declarations are accepted. Suitable evidence is set out in Schedule 3 of the Regulations. Schedule 3 lists a number of orders, interdicts, injunctions and measures that can support a security declaration. It also lists persons who can sign an attestation which can support a security declaration. The evidence listed in Schedule 3 reflects that used to determine whether a person is eligible for anonymous voter registration. That process is similarly focussed on individuals subject to risk.

74. In certain limited circumstances the evidence listed in Schedule 3 may not be reasonably obtainable. For example, where persons who are subject to risk as a result of another person being registered as an associate, such as a refuge worker in the example above, the evidence at Schedule 3 may not be suitable because of its emphasis on personal risk. In such circumstances regulation 16(4)(b) provides that the Keeper may consider such other evidence as they consider appropriate.

75. Regulation 16 sets out that an associate who is an individual can make a security declaration if they, or someone connected with them, would be put in danger if any or all of their required details were made publicly available in the Register. Regulation 16(2), (3) and (4) set out what must be provided in the declaration and that the declaration must be provided to the Keeper and to the recorded person. The evidence required to support the declaration is set out in Schedule 3. Regulation 16(6) sets out that the security declaration ceases to have effect if evidence is not supplied to the Keeper within 60 days of the notification.

76. The purpose of 16(5) and (6) is to allow sufficient time for individuals to obtain and provide the required evidence, while not providing an open ended time period for doing so.

77. Regulation 17(12) sets out that a security declaration takes effect on the day on which the declaration is received by the Keeper. They cease to take effect on the day that the declaration is revoked (under regulation 15) or 30 days after a decision of the Keeper that the security declaration should not apply. Where the Keeper has decided that a security declaration should not apply, regulation 16 provides that an applicant may appeal that decision to the Lands Tribunal. If the decision is upheld the declaration would cease to have effect 30 days after the determination of the appeal.

78. The process for making a security declaration is set out in the diagram below.

Diagram Description

Diagram two outlines the process by which associates can make security declarations. They must provide their security declaration along with supporting evidence to the Keeper. The Keeper considers the declaration and communicates their decision to the associate. If the associate’s declaration is accepted their information is redacted from the Register or otherwise not disclosed. If the declaration is rejected, the associate has an opportunity to appeal that decision in which case the information continues to be withheld while the appeals process is followed. Should they fail to appeal, the information remains on or is entered onto Register after 30 days.

Diagram Description

Diagram three outlines the appeals process. If the associate’s application for a security declaration is rejected, they can decide whether to appeal. If they do decide to appeal they must do so within 30 days and must notify the Keeper of the grounds of appeal within 7 days of the appeal being made. The appeal is heard in private by Lands Tribunal for Scotland. If the Keeper’s decision is upheld, the information remains on or is entered onto Register after 30 days. If the Keeper’s decision is overturned the information remains on or is entered onto Register after 30 days.