Guide to the Register of Persons Holding a Controlled Interest in Land (Scotland)

What is the Register of Persons Holding a Controlled Interest in Land (RCI)?

The legislation governing the Register of Persons Holding a Controlled Interest in Land (RCI) is The Land Reform (Scotland) Act 2016 (Register of Persons Holding a Controlled Interest in Land) Regulations 2021.

The RCI was established and is maintained by the Keeper of the Registers of Scotland (RoS), the body responsible for keeping public registers of land, property, and other legal documents in Scotland. The RCI will contain details on who owns Scottish property and will reveal the identities of the ‘Associates’ of the owner or tenant (Recorded Person).

Although confusion may arise with the better-known Register of Overseas Entities (ROE), which came into force the same year, both regimes were borne out of different rationales. The ROE was the result of the UK government’s aim to fight economic crime. The RCI aims to increase transparency surrounding the decision-making in land dealings in Scotland, making information about who is behind decisions more accessible to the public. There are a lot of similarities between the regimes, but there are many key differences as well.

What is a “Recorded Person” and “Associate”?

The rules introduce two key concepts: a “Recorded Person” and an “Associate.”

Recorded Person (RP) – A recorded person is a person who fulfils both of the following conditions:

• Registered in the Land Register of Scotland or the General Register of Sasines as the owner or the tenant of the land.
• Has an Associate.

Associate – An associate of an individual, organization, or an overseas entity is an individual, public authority, or other legal entity that has:

• A significant influence: where a person is able to ensure that another person will typically adopt the approach the first person desires; or
• Control: Where a person can direct the activities of another.
• An Associate may be a partnership, trust, overseas entity, an individual, or an unincorporated body.

Who needs to register with the Registers of Scotland (RoS)?

The RCI regime applies to owners of land and tenants of registrable leases (i.e., leases of over 20 years); this is, the ‘recorded person’.

Where a person became the owner or tenant of land before 1 April 2022 and an association with an Associate was formed before 1 April 2022, then as of 1 April 2022, the Recorded Person has an obligation to notify the Keeper of the association.

Examples of individuals or organizations with the obligation to register are property owners, such as freehold owners, leasehold owners, or tenants with long-term leases (more than 20 years). ; trustees or representatives of trusts that hold interests in land, and partnerships and or any other corporate entities that have controlling interests in land or hold land on behalf of their members or shareholders. This obligation does not apply to financial institutions (e.g., banks) that provide mortgages, loans, or other forms of financing secured by the land.

Associates are responsible for responding to requests for information, notify the RP of changes, and notify the RP of the fact that they are an Associate, where they have not already been notified of this.

What are the exceptions for RCI registration?

With RCI, there is no obligation to register if the owner or leaseholder does not have an Associate (i.e., anyone behind the decision-making concerning the land dealings). Therefore, to be a RP with the legal obligation to register in the RCI, you must have an Associate.

You are also not required to register if an existing transparency regime already applies, such as the UK Persons of Significant Control regime. This means that, as a general rule, UK companies or Limited Liability Partnerships will not need to register on the RCI. Elemental can help advise clients if this may apply.

Common Examples

The RCI can apply in many different circumstances and if you are in any doubt, we recommend that you contact Elemental or your lawyers to check the application of the rules. However, we have set out below two examples of when Recorded Persons would need to register:

Non-UK company: Where a non-UK company owns land in Scotland and is controlled by another company or individual, they will need to register as a Recorded Person and disclose their Associate(s), ie the persons that control their Non-UK company.

What information needs to be included in the application?

The RCI Regulations apply to owners of land and tenants of registrable leases (i.e., leases of over 20 years). As opposed to the ROE, leases are only registrable when these are longer than 7 years.

The Keeper of the RoS will maintain a public register known as the Register of Persons holding a controlled interest in land (RCI). The RCI will contain information about the recorded person, the land, and the details of the Associate. Example of information required includes:

• Recorded person – Name and address.
• Land – Address (or description, if applicable) and the title number of the property.
• Ownership details – In what capacity the land is held by the recorded person (e.g., as an overseas entity), and details of any entities acting as intermediaries or trusts involved.
• Associate(s) – Name, date of birth (if individual), associate reference number (ARN), address and contact details, the date they became an associate, and any transparency regimes that may already apply.

In the case of complex corporate structures where there are several intermediary entities, the recorded person must disclose all the existing Associates within the chain of entities. In this way, it is different to something like the ROE regime which just captures the ultimate Beneficial Owner.

Who can make the application to RoS?

The recorded person is responsible for submitting the application as an individual or as an organisation. The recorded person will also need the take reasonable steps to verify the accuracy of the Associate’s details with the Associate and notify each of the Associates of the submission of the application to make an entry.

The rules and regulations surrounding this new regime can be complex, especially the tests regarding determining who the Associate is and who needs to register. Elemental can support clients throughout the process and submit the application on behalf of the recorded person.

How will I know if my application is successful?

The Keeper will create an entry no sooner than 30 days after receipt of the information submitted by us or the Recorded Person. 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.

A unique reference number will be provided to the recorded person and each of the Associates. The unique reference number must appear in each entry in respect of that Associate. For example, where one individual has been entered into the register as being an Associate of two different recorded persons, the same unique reference number would appear in each entry.

When does information need to be submitted?

Originally the transition period ended 31 March 2023. However, on the 16^th of March 2023, the deadline was extended, meaning that those in the scope of the RCI now have until 1 April 2024 to register before the offence provisions for non-compliance take effect.

Recorded Persons have 60 days from taking ownership of the land to register on the RCI. Notwithstanding, the transitional period has been extended; hence, no fines will be imposed if the entry in the registry is not created within 60 days.

Who has access to the RCI?

The aim of the RCI is to provide more transparency to the public about who is behind the decision-making concerning land in Scotland and empower the communities to take better and more informed decisions. Therefore, the information included in the RCI entry will be accessible to the public.

Individuals can apply to protect their information through a security declaration, when the inclusion of their details in the RCI may put them at risk of violence, abuse, the threat of violence or abuse or intimidation. Clients may also opt to use Elemental’s service address for privacy purposes.

All of the information provided by the Recorded Person will be public, except for the date of birth of individuals (only in the case of Associates).

What are the consequences of non-compliance with the Act?

Failure to comply with the duties is a criminal offence, with fines of up to £5,000 based on current scales.

Unlike with the Register of Overseas Entities in the absence of a registration, there are no restrictions placed on the land at Registers of Scotland, meaning land transactions can continue to take place.

Will the information on the RCI need to be updated?

It is important to keep the information on the RCI register updated. If there are changes to the controlled interests in land that have been previously registered, it is generally advisable to update the entry as soon as possible to ensure accuracy and transparency. The update will be made on an ongoing basis, depending on the circumstances surrounding the owners or tenants and their respective Associates.

The duty to provide an update in case circumstances change is applicable to the recorded person and the Associate. Not complying with this obligation could be an offence. The specific time frame can vary depending on the nature of the change and the requirements set by the Registers of Scotland. Elemental can advise clients based on their particular circumstances.

The Keeper will have the power to amend the RCI in case of inaccuracies, and questions about the accuracy of information in the Register can be referred to the Lands Tribunal.

How can Elemental help

We already have extensive experience assisting entities with their existing reporting obligations in the UK.

We appreciate that compliance with the registration requirements may be onerous and time-consuming. Elemental will support you in this process and will provide the following services to help you comply with the RCI legislation and applicable legislation:

• Supporting you in identifying the correct disclosures and identifying the Associates;
• Registration of the Recorded Person and its Associate(s);
• Assessing whether other transparency regimes are applicable to avoid the duplication of information already publicly available.

Protection of Information

Although the name of individuals (recorded persons or Associates) will be on the public record, in certain circumstances, it will be possible to protect the information of individuals from public disclosure through a “security declaration”.

Individuals can apply to protect their information if they believe the activities of their overseas entity, or the characteristics or personal attributes of the individual when associated with that overseas entity, will put them or the people living with them at serious risk of violence or intimidation.

We can advise the individual on this process and make the application on their behalf.

Service Address

We can provide a service address in the UK to handle all mail received in relation to the recorded person and/or Associates. This service will be delivered via our secure digital mailroom, allowing easy online access anywhere in the world.

For more information on our RCI service, please visit our RCI Scotland service page or contact us if you have any questions and would like us to assist with the new transparency regime.

 The guide only refers to property in Scotland. The guide is not intended to be legal advice and should not be relied upon as such. If you are in any doubt as to your legal obligations, you should obtain independent legal advice.