The Register of Overseas Entities is on its way
The Economic Crime (Transparency and Enforcement) Act came into force on 15 March 2022. The key outcome of this legislation was the introduction of a publicly accessible register of overseas legal entities that own UK land and their beneficial owners.
Below we offer an overview of the register and answer some frequently asked questions.
Overview of the register
As a result of this new legislation, registration will be required for many existing holdings of UK land, as well as new acquisitions. There is a transitional six month period for registrations to be completed which commenced on 1 August 2023. Disposals by overseas entities between 28 February 2022 and the end of the transitional period will also need to be notified.
Failure to comply with the registration requirements will affect an overseas entity’s ability to buy and sell UK land, and to create a charge over land.
Furthermore, failing to update the register or provide required information will be a criminal offence which may result in financial penalties and imprisonment.
What is meant by an overseas entity?
‘Overseas entity’ means a legal entity that is governed by the law of a non-UK country or territory. ‘Legal entity’ means a body corporate, partnership or other entity that is a legal person under its governing law.
Tax residence is not taken into account. This means that registration will be required by non-UK incorporated. However, some UK tax resident companies will also be required to register, where the other conditions for registration are met.
Trusts do not typically have the legal personality needed to be required to register. However, registration may be required by overseas legal entities owned by trustees. This could lead to the disclosure of information about the trust and associated individuals.
Who must register?
Beneficial ownership information will need to be provided before an overseas entity can register the legal title, a long lease or a charge against UK land. Unregistered overseas entities may be restricted from registering a disposal of UK land. An offence may be committed if an unregistered overseas entity disposes of UK land.
Overseas legal entities will need to register if they already own:
- land in England or Wales that was acquired on or after 1 January 1999; or
- Scottish land that was acquired on or after 8 December 2014.
Overseas entities will need to provide information to Companies House if they dispose of land between 28 February 2022 and 31 January 2023.
How do I register an overseas legal entity?
Registration applications from overseas entities must include the following information:
- a statement concerning the information provided about registrable beneficial owners and, where obtained, the required information;
- an additional statement that the overseas entity has complied with its duty to take steps to identify beneficial owners;
- any further information required under separate regulations that have not yet been laid relating to the verification of registrable beneficial owners and managing officers; and
- the name and contact details of a person who may be contacted about the registration.
The Secretary of State may make further regulations about statements to be made and information to be provided.
Registration applications that are made within the six-month transitional period following the introduction of the register must also contain either confirmation that there have been no dispositions of UK land between 28 February 2022 and 31 January 2023, or will need to provide the statements and the information specified as it stood or stands at the date of disposal.
The date of disposal and registered title number of the land (or title number of the title sheet for Scottish property) will also need to be provided. Exceptions from this requirement apply in some circumstances, such as where the disposal is or was required due to a court order.
When Do I need to update the register?
Annual updates or confirmation that there are no reportable changes will be required. The deadline for this is 14 days within the end of each year based on the anniversary date of the overseas entity first registering, unless the overseas entity changes the due date by shortening an update period and providing information by an earlier date.
What is a Registrable beneficial owner?
The definition of ‘registrable beneficial owner’ is intended to align with that which applies to the UK’s separate People with Significant Control (PSC) register that applies to UK legal entities. Individuals, legal entities, governments and public authorities can be registrable beneficial owners. Governments and public authorities are not considered further in this article.
Individuals and legal entities are registrable beneficial owners if they meet one or more of the below conditions:
- They directly or indirectly own more than 25% of the shares in the overseas entity;
- They directly or indirectly own more than 25% of the voting rights in the overseas entity;
- They hold the right, directly or indirectly, to appoint or remove the majority of the board of directors;
- They have the right to exercise, or actually exercise, significant influence or control over the overseas entity;
- Where trustees of a trust or members of a partnership, unincorporated association or other entity that is not a legal person under its governing law meet the above listed conditions in their capacity as trustees, etc. and have the right to exercise, or actually exercise, significant influence or control over the activities of that trust or entity.
Legal entities are not registrable beneficial owners if they are subject to their own disclosure requirements, as defined.
Overseas entities must take reasonable steps to identify and obtain information about registrable beneficial owners. This includes giving an information notice to anyone the entity knows or has reason to believe is a registrable beneficial owner in relation to the entity.
Information notices must require recipients to state within one month whether or not they are a registrable beneficial owner in relation to the entity. If so, they must confirm or correct any information that is specified in the notice and provide any information that the notice states the overseas entity does not already have.
HMRC have published a list of the information required: click here to read more.
Removal from the register
Registered overseas entities will remain on the Register until they have successfully applied to be removed once they are no longer the registered owner of UK land. The Act does not provide a specific deadline by which applications for removal should be made.
Overseas legal entities may wish to consider whether they will be required to register or submit information to Companies House about disposals that occur between 28 February 2022 and the end of the six-month transitional period being 31 January 2023.
Overseas legal entities that need to register can consider to whom information notices should be issued once the Register is in force. They also need to consider what information should be requested in information notices that are to be issued.
If you need any help with registration, or have further questions, get in touch with our International team on 01293 227670.