Under the Economic Crime (Transparency and Enforcement) Act which received Royal Assent in March 2022 (the “Act”), the Registrar of Companies is creating a new Register of Overseas Entities (the “Register”).
The Register will require currently anonymous owners of UK property who hold property via overseas companies or similar structures to disclose their identities. A failure to comply will mean they will be unable to register their purchase, sale, lease or mortgage of land in the UK.
The Register is just one of the tools at the Government’s disposal to tackle financial crime while also still highlighting the UK as an attractive destination for investment to legitimate entities.
Who will this apply to?
Any company or similar legal entity which is governed by the law of a country or territory outside the UK (the “Overseas Entity”).
The requirement to register will apply to Overseas Entities which bought land:
- since January 1999 in England and Wales
- since December 2014 in Scotland; and
- from the day the Register is launched in Northern Ireland.
Are there any exemptions?
Exemptions will be available in limited circumstances: when the Secretary of State exempts a person from registering due to the interests of national security and for the purposes of preventing or detecting serious crime.
What will need to be done?
Overseas Entities who already own land in the UK will be given 6 months to apply to register and to provide details of their beneficial owners. Information supplied to Companies House will be required to be verified (the details of this requirement are yet to be confirmed by Companies House). This 6 month period will begin once the Register has been launched, which is expected to happen this summer.
Overseas Entities who have disposed of land after 27 February 2022 will also need to apply to register and to provide particulars of such disposals within the above 6 month period.
Any new purchasers will need to register with Companies House from the day the Register comes into effect. Overseas Entities that are planning to purchase UK land or property over the summer should start planning for this requirement. Once the Register is live, they will need to register with Companies House before applying to register their land purchase with the Land Registry.
Once the Overseas Entity has registered and provided all the necessary information, it will receive an Overseas Entity ID from Companies House. This ID will then need to be shared with the Land Registry whenever the Overseas Entity buys, sells, transfers, leases or charges land in the UK.
The Overseas Entity will need to update its information about beneficial owners every year.
Public and transparent
After registering, the name of the Overseas Entity and the details of its beneficial owners will be publicly available on the Companies House website. Some individuals will be able to protect their information from public disclosure under certain circumstances, but the information will still need to be notified to Companies House.
Overseas Entities who do not register or do not update their information will face sanctions such as daily fines and not being able to transact with their land. Providing false information will be a criminal offence leading to a fine or imprisonment (or both).
What happens next
Companies House and the Land Registry have been collaborating to make sure the Register is implemented as soon as possible.
Companies House will soon be writing to all Overseas Entities captured by the Act who own land in England, Wales and Scotland to make sure they know about their new responsibilities.
The launch date for the Register will be confirmed once the secondary legislation is laid. The secondary legislation will fill in the details of the new regime and will provide the practical measures required for the legislation to come into effect, including a commencement date for the Register.
If you have any questions about Overseas Entities, please get in touch with our Real Estate Finance team.
