Register of Overseas Entities

Overseas entities (OEs) that own UK land must join a new register to be administered by Companies House that will capture details of their beneficial owners, in order to reveal their identities and encourage greater transparency. The register is expected to go live on 1 August 2022.

An OE 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 the UK. A beneficial owner is subject to criteria similar to those of the PSC regime: an individual, government, public authority or other legal entity must directly or indirectly hold more than 25% of the shares and/or voting rights in the overseas entity, for example.

What is the impact of the register?

Upon registration, the OE will be allocated a unique ID number. Without the necessary ID, the OE will not be able to buy and sell UK land (purchase, lease over 7 years, charge). There are limited exceptions.

Once registered, the OE must submit an annual update to Companies House to maintain an active ID.

Failing to register an OE or update the register, delivering false information, or transferring land in breach of the registration requirements are criminal offences, attracting hefty fines and prison sentences for the OE and individual officers.

The legislation is retrospective; it applies to OEs that have purchased UK land since January 1999. OEs that currently own UK land will have 6 months from the register becoming active to join; if the register goes live on 1 August 2022 as planned, the transition period would end on 31 January 2023.

OEs that sell their UK land after 28 February 2022, but before the end of the 6 month period, may not need to register, but must still disclose their beneficial ownership information. This is to prevent OEs from by-passing the regime by selling their land before the register is set up.

A relevant person (such as a lawyer, financial institution or estate agent) will need to verify the required information about an OE before the OE, or an agent on its behalf, can register.

When does the register come into force?

Companies House expect to launch the register on 1 August 2022. There is likely to be a backlog soon after it does, and extra time should be factored into transactions to allow for the registration process and receipt of the ID number from Companies House. UK property transactions involving OEs should now include additional clauses to protect both buyers and sellers, and lenders will want to see additional provisions too.

For more information on this article, please contact Tamara Paul.