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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?

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    I'm voting to close this question as off-topic because it seems to be about corporate law and not personal finance. – TripeHound Aug 27 at 7:03
  • This is about personal finance as this is about a limited company which is a familiy holding. Here are many questions about using a limited company as a vehicle to manage one's investments for example and this isn't all out of topic. – TorstenS Aug 27 at 7:55
  • OK... if you can edit information into the question that clarifies the personal nature, I'll happily withdraw the close vote. (But I think it should probably be more than just "it's a family holding"... e.g. is "the family" the beneficial owners of the GmbH, and is the UK director part of the family/one of those B.O.s?). Separately, would not the German equivalent of Notarisation of ID documents, assuming it exists, be sufficient without them having to travel to the UK? – TripeHound Aug 27 at 8:14
  • The update helps, but I suspect this is straying into legal issues more than financial ones... for clarification, are the family members German or British nationals? For instance, Germany: notarial and documentary services guide seems to provide a possible way for a British consulate to affirm the identity of a British citizen remotely... Has the solicitor said why they feel the need for such identification (and whose solicitor is it?) – TripeHound Aug 27 at 8:59
  • Is this your solicitor or the property seller's? If yours have you looked around for an alternative yet? I think the question is on-topic for here in theory, but in practice I'm not sure if you'll get an authoritative response. law.se might be better. – GS - Apologise to Monica Aug 27 at 9:41
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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.

  • You can see that 25% thing being carried through into information like this: foxtons.co.uk/help/aml-documents.html – timday Aug 27 at 13:07
  • So in case I do not misread this: Someone who owns less than 25% would not be considered a "beneficial owner" for the purpose of these regulations. I was under the assumption that that would be the defintion of PSC (person with significant control). So this may help ... – TorstenS Aug 27 at 13:11
  • @TorstenS I could well have found only part of the story. But hopefully even if there are bits missing, it's a good starting. point to look further. – GS - Apologise to Monica Aug 27 at 13:57
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    I am not a lawyer, but even having less than 25% in the GmbH may not let you escape... if the "body corporate" above is being applied to ACME, then the first quote seems to be about who controls that, and since ACME is 100% owned by the GmbH, then anyone with a stake in the GmbH seems to me to qualify (as individual who controls the body corporate). As I (perhaps incorrectly) see it, the 25% would only kick in if the GmbH wasn't the sole owner of ACME (e.g. 3 family members directly owning 33% each of ACME would fall under the above; 5 members directly owning 20% each of ACME wouldn't). – TripeHound Aug 27 at 15:37
  • @TripeHound I don't think it's control unless you have >50% of the voting rights. The clauses are all about individuals, not companies, and given the wording about "directly or indirectly", I think they just look through layers of holding companies to find the ultimate human owners. – GS - Apologise to Monica Aug 27 at 21:02

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