REQUIREMENT TO REGISTER OVERSEAS ENTITIES

The Economic Crime (Transparency and Enforcement) Act 2020 (the “Act”) brings in a new requirement that any Overseas Entity, which already owns freehold or leasehold land acquired at any time after 1 January 1999 must register with Companies House.

The legislation has been fast-tracked through Parliament and seeks to address Governmental concerns about the lack of transparency in UK property ownership and to help prevent money-laundering and financial crime.

Requirement to Register

In addition to applying to Overseas Entities which already own freehold or leasehold land acquired at any time after 1 January 1999, the Act also applies to:

• any Overseas Entities that wish to acquire a freehold or leasehold estate of more than seven years; or
• wishes to dispose of a freehold or leasehold estate of more than seven years.

In addition to registering the Overseas Entity itself, there is also an obligation to register details of its beneficial owners and a requirement to keep the Register updated.

Timetable

Companies House launched the new Register on 1 August 2022, but the Act provides for a transitional period ending on 31 January 2023 to give Overseas Entities the opportunity to comply with the registration requirements with respect to properties that they currently own.

In addition to the requirement to register at Companies House, there is a parallel set of provisions relating to Land Registration and these come into force on 5 September 2022.  This means:

An overseas entity applying to register an land transaction after 5 September 2022 MUST present their registration number from Companies House in order for the transaction to be registerable at the Land Registry.

Penalties

As a demonstration of how seriously the Government is taking the matter, penalties for non-compliance are commensurably severe.

If an Overseas Entity does not comply with the Act, it could be fined up to £2,500.00 per day and officers may receive a prison sentence up to five years.  The Overseas Entity will also face restrictions when buying, selling, transferring, leasing or charging property or land in the UK.

Registration

Overseas Entities to which the legislation applies must:

1.         take reasonable steps to identify any registerable beneficial owners;

2.         register with Companies House information about the Overseas Entity and its registerable beneficial owners; and

3.         update Companies House on an annual basis to confirm that the information on the Register is still correct.

The following information must be disclosed about all registerable beneficial owners:

• Name
• Date of birth
• Nationality
• Usual residential address and address for service

It is important to note that some of this information will be available for inspection by anybody undertaking a search of the Companies House Register, although data such as, date of birth and residential address will not be made public.

If you have any questions regarding this new and significant piece of legislation or if you would like us to assist in ensuring that your Overseas Entity complies with the Act, and assistance with registration, please do not hesitate to contact Tim O’Callaghan.