Scotland Update: Register of persons holding a controlled interest in land – Impact on fund structures

This note discusses the impact on fund managers of new rules involving influence over Scottish land.

If there is Scottish land anywhere in your fund structure, an analysis will be necessary to ascertain whether registration is required.

New regulations are now in force in Scotland requiring the registration of persons holding a “controlled interest” in Scottish land. The aim of the register of persons holding a controlled interest in land (“RCI”) is to increase the transparency of those who have control over decision-making in relation to land in Scotland.  It is distinct from the land ownership register and is designed to capture a broad range of persons with interests in Scottish land that do not amount to ownership.

The new register was put in place on 1 April 2022. While the register is directly related to land, the obligation to file in the RCI may arise where there is no transfer of land. Filing may be required where there is a person (the “Associate”) who has significant influence or control over an owner or tenant of Scottish land (the “Recorded Person”).

At first glance, the RCI might not appear relevant to your fund structure. Indeed, we expect that in most funds transactions, an RCI filing will not be required.  However, it is important to consider the new rules carefully wherever there may be a direct or indirect interest in Scottish land, as failure to comply with the regulations is a criminal offence carrying financial penalties of up to £5,000.

The obligation to register in the RCI applies in relation to all existing instances of controlled land as of 1 April 2022, in addition to all new instances. There is a grace period until 1 April 2023, allowing persons and entities 12 months in which to register should they be required to do so without risk of criminal sanction.  Given the novelty of the legislation and the potentially far-reaching requirement to register, it is important to analyse carefully relevant facts and circumstances well in advance of 1 April 2023.

By Burness Paull LLP, Scotland, a Transatlantic Law International Affiliated Firm.  

For further information or for any assistance please contact ukscotland@transatlanticlaw.com

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