The Act will introduce a publicly accessible register and will require non-UK entities with a “relevant interest in land” to register the identity of their beneficial owners with the UK companies registry and to update that register annually. A “relevant interest in land” for this purpose includes a freehold estate and certain leasehold estates.
The Act will apply to all Isle of Man entities that are treated as legal persons under Isle of Man law. This includes all types of Isle of Man company, foundations, limited liability companies, and limited partnerships that have made a valid election to have separate legal personality. Isle of Man trusts, general partnerships and limited partnerships that have not elected to have separate legal personality will not be subject to the registration requirements under the Act.
The registration requirements will apply to all future acquisitions of UK property by Isle of Man entities and also retrospectively to property acquired by Isle of Man entities in England and Wales since January 1999 and Scotland since December 2014. There will be a grace period of six months for registration of an Isle of Man entity with an existing relevant interest in land, and there will be criminal penalties for non-compliance.
In broad terms, an Isle of Man entity will be required to register the details of any person who:
- holds, directly or indirectly, more than 25% of its shares or voting rights;
- holds the right, directly or indirectly, to appoint or remove the majority of the members of its board of directors;
- has the right to exercise, or actually exercises, significant influence or control over it; and/or
- has the right to exercise, or actually exercises, significant influence or control over the activities of any trust, partnership or other unincorporated entity that is not a legal person but that meets any of the above criteria in relation to the Isle of Man entity.
Any Isle of Man entity that is subject to the registration requirements under the Act will already be required to identify and verify its beneficial owners under the Isle of Man Beneficial Ownership Act 2017, so this information should be readily available. The relevant provisions of the Act will only come into force once certain implementing regulations have been enacted.
We anticipate that the Act will result in additional requirements for Isle of Man entities that are involved in financing and acquisition transactions. In particular, registration will likely become a prerequisite of all transactions involving UK property with more scrutiny and due diligence in respect of beneficial ownership.
Isle of Man entities that already hold a relevant interest in UK property, or are about to acquire UK property, should be mindful of their obligations under the Act and take appropriate advice.