You may or may not have heard of the Economic Crime (Transparency and Enforcement) Act 2022. This was an act rushed through Parliament at break-neck speed on the back of events such as those in Ukraine.
As well as dealing with sanctions and unexplained wealth orders, if you own shares in an overseas entity that owns UK property/land, the introduced Register of Overseas Entities (RoE) applies to you. The purpose of the RoE is to record information regarding beneficial owners of overseas entities which own UK property/land, providing greater transparency to then improve the transparency of who owns property in the UK, all with a view to combatting illicit money laundering by overseas entities. For a beneficial owner to be registerable on the RoE, they would need to own at least 25% of the shares in the overseas entity.
The RoE will also hold information about overseas companies and other types of legal entity formed in countries and territories outside the UK which hold property in the UK.
As a general rule, you will need to register with Companies House by 31 January 2023.
Failure to comply with the RoE could result in a fine of up to £2,500 per day and/or a prison sentence of up to five years.
There will also be restrictions on the overseas entity to either buy, sell, transfer, lease or place a charge over the property/land within the UK.
Generally speaking, this will mean that overseas entities who own or are the tenant in a long lease of property in the UK will have to register in the RoE. Long leases in Scotland are granted for more than 20 years, and in England and Wales for more than 7 years.
The RoE will also hold details of any beneficial owners of the overseas entity and, if there are no beneficial owners or if details of all beneficial owners cannot be confirmed, details of the managing officers of the overseas entity. Overseas individuals who own or lease property in the UK do not have to register in the RoE.
Overseas entities should now send information notices to those that they know to be or believe to be registerable beneficial owners, informing them of the requirement to register on the RoE. Responses should be received within one month of the information notices being issued, or a criminal offence will have been committed.
Overseas entities planning to purchase UK property/land should register on the RoE and obtain an overseas ID number before the purchase completes (effective from 1 September). The overseas entity ID number will need to be supplied to the Land Registry to complete the purchase. Failure to do so may result in an abortive purchase.
Overseas entities should source a relevant person to complete the verification process. Once registered, the overseas entity should keep their overseas entity ID number somewhere safe.
There is an ongoing obligation to update the RoE and complete the verification process on an annual basis. Overseas entities should receive a letter from Companies House regarding the requirement to register on the RoE by 31 January 2023. However, if this letter is not received, this does not absolve the overseas entity of the requirement to register.
There is a £100 fee to complete the registration with Companies House. The fee may only be paid either by debit or credit card (but this may change in the future so that bank details are to be provided).
The RoE can be accessed by the public. However, certain information will be redacted, including addresses and dates of birth of registerable beneficial owners.
In conclusion, overseas entities should check whether they own any UK property/land and also check the date of any previous disposals. Any property/land disposed from 28 February 2022 will be caught and therefore the overseas entity will need to register on the RoE. This is the case even if the overseas entity no longer owns any UK property/land.
Regards to all