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The situation is the following:

Our family has setup a structure of companies to manage our investments into real estate.

There is ACME Limited, a UK limited company properly registered in the UK, able to prove its identity, registered office and trading address in the UK. The sole director of ACME Limited is a UK resident who can also produce the relevant proofs for his person.

ACME Limited is a wholly-owned subsidiary of another company registered and trading in the EU, let's call them Mothercompany GmbH.

Now ACME Limited wants to buy some property in the UK. The solicitor now is asking for all beneficial owners of Mothercompany GmbH outside the UK to prove their identity and address. That would mean in practice that each of them had to show up personally with their passport at the solicitor's office, which is entirely impractical.

The reason why that construct of ACME Limited as a subsidiary of Mothercompany GmbH was chosen was to make sure that the director of ACME Limited in the UK can act within the boundaries which the owners of the company have set him internally.

Is that solicitor just trying to be overly careful here? I have asked for some first hand information writing where I could understand that he really is right, yet so far I neither received anything nor was I able to find something on the Internet.

Any views? Any practical experience? Any relevant sources to quote?

TorstenS
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1 Answers1

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It looks like this requirement comes from the Money Laundering Regulations 2017:

5.—(1) In these Regulations, “beneficial owner”, in relation to a body corporate which is not a company whose securities are listed on a regulated market, means—

(a) any individual who exercises ultimate control over the management of the body corporate;

(b) any individual who ultimately owns or controls (in each case whether directly or indirectly), including through bearer share holdings or by other means, more than 25% of the shares or voting rights in the body corporate; or

(c) an individual who controls the body corporate.

and then there's a whole bunch of stuff about "due diligence" starting at regulation 27.

The related FCA guidance also says this (section 3.2.4):

Where a firm cannot apply customer due diligence measures, including where a firm cannot be satisfied that it knows who the beneficial owner is, it must not enter into, or continue, the business relationship.

So unless each owner has less than 25%, it looks like you don't have any way of avoiding this.

Community
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Ganesh Sittampalam
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