| This article was updated on 3 February 2023 |
The Register of Overseas Entities (“Register”) is incorporated into the Economic Crime (Transparency and Enforcement) Act 2022 (“Act”), the Bill for which, in response to Russia’s invasion of Ukraine, was expedited through Parliament with the Act receiving Royal Assent on 15 March 2022. The Act, as well as including requirements relating to registering overseas entities which own land in the UK, also amends existing legislation in relation to sanctions and addresses changes to the UK’s wealth orders regime.
This guide covers the practicalities of the new Register, including who it applies to, how to make an application to the register, associated deadlines and sanctions for failure to comply.
The new Register, to be kept and maintained through Companies House, will contain certain details
of overseas entities and their beneficial owners which own UK land or property in order to reveal their identities, to aid the government in fighting economic crime and encourage greater transparency. This should reduce illicit transactions and, as an example, prevent multiple shell companies being used to disguise the real owner sat behind such companies.
The Register went live on 1 August 2022 and is available to view on the Companies House website (excluding some personal data).
The register applies to Overseas Entities and their Beneficial Owners (including managing officers in lieu of Beneficial Owners).
An “Overseas Entity” is a legal entity (corporate body, partnership or other entity that has separate legal personality under the law by which it is governed such as an LLP) that is governed by the law of a country or territory outside of the UK.
A “Beneficial Owner” is an individual, government, public authority or other legal entity who falls into at least one of the following conditions:
Please note though, that the Register is not aiming to contain details of all beneficial owners of the relevant land; it exists to provide information regarding beneficial owners of the Overseas Entity which holds the land.
If trusts and partnerships do not have legal personality under the law by which they are governed, but the trustees of a trust, or members of a partnership, meet any of the beneficial owner conditions above, then there will be a requirement to register and provide certain details about the trust.
Trusts may also be required to register with the Trust Registration Service (“TRS”), as well as on the Register, creating a degree of duplication. This would be the case where a corporate trustee that is not a UK resident, for example, acquires land directly in England and Wales and is thus required to register with both the TRS and on the Register.
Yes there are certain exemptions for Beneficial Owners. If a Beneficial Owner holds an interest directly through an entity which is subject to its own disclosure requirements, then it does not need to be registered (such as the Beneficial Owner holding its interest through a company which is registered on the PSC Register, or which is itself an overseas entity which must be registered under the Act).
The Secretary of State may also exempt a person from certain aspects of the registration requirements in the interests of national security, or preventing serious crime.
The requirement to register applies to any “Qualifying Estate” owned by an Overseas Entity, which is:
The application is made to the Registrar of Companies (known as Companies House) as follows:
However, in order to make an application, an acquiring Overseas Entity must identify a ‘relevant person’ who will need to undertake verification checks on the Overseas Entity and verify its information, which could take a substantial amount of time depending on the structure of the Overseas Entity. The ‘relevant person’ may be an independent legal professional, estate agent or accountant, but they first need to register with Companies House and be issued with a registration number (please note Ashfords LLP does not act as a ‘relevant person’ for the purposes of undertaking verification checks and registration at Companies House with regard to the Register of Overseas Entities).
The required information about an Overseas Entity includes:
Where a registrable Beneficial Owner is an individual, the required information includes:
Where the registrable Beneficial Owner is a legal entity other than a government or public authority, the required information includes:
Where the Beneficial Owner is a trustee, the required information includes:
Yes. If an Overseas Entity has failed to comply with the deadline of 31 January 2023 to register with Companies House, the Overseas Entity and each of its officers will have committed a criminal offence.
An offence will also be committed where a recipient of an information notice from an Overseas Entity fails to comply with such a notice, or makes false statements (either intentionally or recklessly) in purported compliance with any of the obligations. These offences can result in fines and criminal sanctions, with up to 5 years’ imprisonment.
The Registrar of Companies has been given the power to enforce the sanctions. Although we don’t yet know how strict the Registrar of Companies will be in enforcing such sanctions, it is worth noting that the financial penalties were put in place as, in some cases, a prosecution against non-compliant overseas entities or individuals might not be possible, as many of those in scope of the requirements will be overseas. Therefore financial penalties may be imposed on those who are non-compliant in the first instance, with the possibility of criminal sanctions as well. However, at the time of writing, there are still thousands of Overseas Entities still yet to register at Companies House, which will likely impact how strictly these sanctions are enforced, perhaps at least until the number of Overseas Entities registered at Companies House has increased significantly.
If an Overseas Entity hasn’t applied to have its details on the Register by 31 January 2023 and obtain the necessary verification, it will impact on the Overseas Entity’s ability to sell, register leases of more than seven years, or charge the land it owns. There could also be title restrictions on the registration of any disposals or transactions involving the land.
The effects on land due to failure to register will result in scenarios such as:
To avoid these scenarios, it is important that:
Title restrictions, due to an Overseas Entity failing to register, will prohibit the registration of any disposition unless any of the following apply:
Yes, the requirements will apply to all Qualifying Estates acquired since January 1999 in England and Wales (and December 2014 in Scotland).
Overseas Entities will need to register to acquire any Qualifying Estate from 1 August 2022, otherwise, without registration, it will not be possible to become legal owner of the property as registration won’t be accepted at HM Land Registry and the Overseas Entity will only have an equitable interest in the land.
Retrospective applications for Qualifying Estates acquired since January 1999 in England and Wales have a transitional six month period for registrations to be completed; the Register came into force on 1 August 2022 so the transitional period ended on 1 February 2023 (applications for registration must have been provided to Companies House by 31 January 2023).
Applications for registration made within the six month transitional period will also need to provide information to Companies House where there has been a disposition of land between 28 February 2022 and 31 January 2023, or confirm that there have been no such dispositions.
Yes, the Overseas Entity will need to update the Register every 12 months to make changes to information previously provided or confirm that there have been no changes.
Updates must be given within 14 days of each anniversary of the initial date of registration.
If an Overseas Entity fails to comply with the updating requirements, the Overseas Entity and its officers will commit an offence, and are liable to a fine.
If an Overseas Entity no longer holds any qualifying land or property, then it can apply under the Act for removal from the list of registered Overseas Entities. An Overseas Entity should request that the buyer notify them and their legal advisors once the transfer of land has been registered at HM Land Registry, so that the selling Overseas Entity has confirmation of when it is able to make an application for removal from the Register.
There is not currently a deadline by which an application for removal must be completed, but given the obligation to update the Register, it is presumed that an application can be made in conjunction with the annual deadlines to update the Register. However, without further clarification, at present, the guidelines to the Act suggest that the information provided to Companies House isn’t completely removed, at least not straight away. Applying for removal will just allow the Overseas Entity to not have to comply with the annual updating duty and information showing at Companies House for an Overseas Entity will be noted as being historic.
Given that the 31 January deadline has passed, and sanctions and restrictions on title are now applicable, it would be prudent to register as soon as possible by following these steps:
If you would like any further advice or assistance, please contact a member of our Corporate team or Real Estate team.
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