Register Of Overseas Entities under the Economic Crime Act - From SAM Conveyancing
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Register of Overseas Entities

Caragh Bailey
13/05/2022
2
5 min read
*This briefing covers England and Wales. The provisions apply differently in Scotland and Northern Ireland*

UK property held by overseas entities (a corporate body, partnership or other entity that has a legal personality under the law by which it is governed) must now register their beneficial owners with Companies House, in the Register of Overseas Entities. You don't need to register if the property is held in your personal name.

This comes under The Economic Crime Act which was introduced in March 2022 to reveal the individuals who are benefiting from UK property, where they may be 'hiding' behind the overseas entity.

The clampdown on economic crime was first floated in 2016 but became a priority this year, following the invasion of Ukraine, in hopes to reveal Russian individuals holding UK property through overseas entities.

Many UK properties are legitimately held overseas due to corporate structuring. However, there are some individuals who use offshore entities for money laundering, tax evasion and other economic crimes.

If an overseas entity fails to register its beneficial owners this will constitute a criminal offence by the entity and its officers, resulting in up to five years prison sentence or fines (with a daily default rate of up to £2500).

This information must be updated annually.

Once the registration information is identified, Companies House will issue the overseas entity with a unique ID code. This will be required for any application to HM Land Registry to register the entity as legal owner of the property.

As such, entities failing to register their beneficial owners will be unable to register a disposition on the property - HM Land Registry will place a restriction on the property which will not allow disposal, unless a valid ID is provided or the property is exempt. See what properties are affected.

As well as failing to comply with registration obligations, it is a particular criminal offence if an entity makes a registerable disposition in breach of the restriction.

What do I need to do?

    1
    Begin auditing your UK land holdings and gather the information which you will need to provide on the register. (Name, date of birth, nationality, registration number, and residential address/principal office).
    2
    Bear in mind that you will need to provide details of any relevant disposal made since 28 February 2022 and the registrable beneficial owners at the time.
    3
    Carry out additional due diligence when engaging with any overseas entities holding UK property. You may wish to include additional contractual protections, such as a termination clause, if the entity fails to comply with the new legislation.

Frequently Asked Questions

The register applies to properties which were acquired on or after 1 January 1999. If they are not properly registered, they will be restricted from registering a transfer, a lease of more than 7 years, or the grant of a legal charge, unless they are exempt.

Exempt disposals include those made under a statutory obligation or court order, by 'power of sale' by the lender, or where the disposal contract was made before the restriction was placed on the property.
They can be either:
  • an individual,
  • a legal entity, or
  • a Government or public authority.
And one of the following must apply
  • The registrable beneficial owner holds, directly or indirectly, more than 25% of the shares.
  • The registrable beneficial owner holds, directly or indirectly, more than 25% of the voting rights.
  • The registrable beneficial owner holds the right, directly or indirectly, to appoint or remove a majority of the board of directors.
  • The registrable beneficial owner has the right to exercise, or actually exercises, significant influence or control over the entity.
  • The trustees (of a trust, or the members of a partnership, unincorporated association or other entity, that is not a legal person under the law by which it is governed), meet any of the conditions specified above (in their capacity as such), and the registrable beneficial owner has the right to exercise, or actually exercises, significant influence or control over the activities of that trust or entity.
For each registrable beneficial owner you will need to provide: Name, date of birth, nationality, registration number, and residential address/principal office. Information held by Companies House is publicly available.
The Economic Crime Act was passed in March 2022, but the operative restrictions are not yet in place. The secretary of state will set this date at a future time. There will then be a 6 month grace period to comply, in which time the entity will not be caught by the restrictions placed on the property by HM Land Registry.

Overseas entities will be required to disclose any disposal of relevant interest in land from 28 February 2022 until the end of the 6 month transition period. Even if the entity holds no UK property by the end of the transitional period, they will have to provide details of the beneficial owners as of immediately before each disposal which occurs in this time.
A non UK trust will not fall under this regime unless it has a legal personality. However, it may be required to register with the TRS Register - This is not open to public inspection.
An overseas corporate nominee which owns land for Individual X will be required to disclose the beneficial owners of the nominee entity. The beneficial owner of the land (i.e. Individual x) does not have to be disclosed, except where they have significant control over the nominee.
You don't need to register if the property is held in your personal name. This legislation applies to property held by an overseas corporate body, partnership or other entity that has a legal personality under the law by which it is governed.

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