The Register of Persons Holding a Controlled Interest in Land (RCI) looks behind the titles and long leases (over 20 years) registered in the Sasines and Land Registers of Scotland to disclose the Associates of the owner or tenant. The Associates are those persons or entities who significantly influence or control the owner or tenant and/or make the decisions. Failure to register existing interests covered by the RCI by 1 April 2024, and going forward failure to register new interests covered by the RCI within 60 days, is a criminal offence punishable by a fine.
The RCI is only relevant if certain types of owners or long lease tenants with property registered in Scotland have at least one Associate. It does not apply to all types of owners or tenants.
Owners and tenants NOT affected by the RCI
The RCI does not apply to specified types of owners or tenants which are already subject to their own transparency regimes. For example, it does not apply to owners or tenants who are UK companies, LLPs, certain UK registered charities or bodies that are subject to the Freedom of Information Acts. This is the case regardless of the capacity in which the owner or tenant holds the property.
Notably however, the Register of Overseas Entities is not treated as a transparency regime for the purposes of exempting an owner or tenant from registering in the RCI. Overseas entities which have already registered in the Register of Overseas Entities may still be required to register in the RCI.
Owners and tenants affected by the RCI
The RCI only applies to owners or tenants of Scottish property who are individuals with a contractual or other arrangement in respect of their property, overseas entities and those holding the property by or on behalf of a partnership, trust or unincorporated body. And, it will only apply to these owners or tenants if they have at least one Associate.
Who is an Associate?
The rules for determining Associates are complex and are different for each category of owner/tenant. Broadly speaking, an Associate is a person or entity who is not registered on the title or lease but who exercises or can exercise significant influence or control over the owner or tenant or their major dealings with the property. For trusts, partnerships and unincorporated bodies, any trustee or partner who is not registered on the title or lease is automatically an Associate whether or not they in fact can or do exercise influence or control.
Examples of significant influence and control include holding more than 25% of voting rights in an overseas entity, the right to unilaterally take or veto governance decisions or to appoint or remove partners in a partnership and the right to dictate how trust funds are distributed or to appoint or remove trustees of a trust. For an unincorporated body, any person who is responsible for the general control and management of the administration of the unincorporated body (e.g. an office bearer) will be an Associate.
The above are only examples – there may also be other persons or entities with significant influence or control who must be disclosed to the RCI.
Who must register in the RCI?
The owner or tenant affected is responsible for submitting their details and information about the property and their Associates to the RCI. They must take reasonable steps to verify the information with the Associates before submission.
Associates do not make any direct submissions to the RCI. They must always channel information through the owner or tenant and they must verify their details when requested to do so. Associates are also subject to various other RCI duties including contacting the landowner if they have not been asked to verify their details within a certain timeframe.
Information to be submitted
The following information must be submitted and (other than dates of birth of Associates) will be publicly available on the RCI on the Registers of Scotland website:
- The owner/tenant - name, address, any registered number, their unique RCI number (if they have one), the capacity in which they hold the property (e.g. as trustee) and if applicable, on whose behalf they hold the property;
- The property - the address, any title number or postal address or sufficient description; and
- The Associate - name, address, any registered number, their date of birth if an individual (this will not be published), the Associate's unique RCI number (if they have one) and the date their association with the owner/tenant started.
Deadlines and updates
Registration is free of charge and must be completed by 1 April 2024 for all existing controlled interests that are caught by the RCI rules to avoid penalties. Going forward, an RCI submission must be made within 60 days if a property is acquired which has a relevant controlled interest, or if an existing interest becomes controlled in a way that is caught by the RCI rules.
There is no annual updating requirement. However, if there are any changes to the information that has been submitted to the RCI, updated information must be submitted within 60 days.
Penalties for non-compliance
Fines of up to £5,000 may be imposed for failure to register details in the RCI before the 1 April 2024 deadline or within 60 days after any event which requires an entry to be updated or registered. Fines may also be imposed for submitting false or misleading information. Non-compliance with RCI requirements will not block registration of transactions.
RCI beyond 1 April 2024
There will be a huge rush to make submissions to the RCI before the 1 April 2024 deadline but we must not lose sight of RCI requirements for future land transactions and changes to existing arrangements. For example, overseas entities taking title to a property in Scotland will have to make a submission to the RCI if they have Associates; and if a title does not disclose the appointment of new trustees or partners, an RCI submission must be made within 60 days of their appointment.
RCI requirements may influence the decision on which entity takes title to a property in Scotland. Please contact your usual Brodies contact should you like any further information on this or anything else connected to the RCI.
The above is a summary of the regulations and procedures in relation to the RCI which is correct at the date of publishing. It should not be relied on in specific circumstances without consulting the relevant legislation in more detail or seeking legal advice.
A blog on frequently asked questions can be found here.
Contributors
Director of Knowledge (Real Estate)
Practice Development Lawyer
