The new Register of Overseas Entities – An overview
06 Sep 2022
Auctions & Investment Property Advisory, International, Real Estate
From the 1st August 2022 the Register of Overseas Entities was created at Companies House and requires that Overseas Entities (broadly being non-UK companies and other bodies) that own land, or property with a lease of 7 or more years in the UK, to register the details of their beneficial owners
Unusually for UK law it will have retrospective effect in that any Overseas Entities that purchased or leased land on, or after, 1 January 1999 in England or Wales will also need to register the details of their beneficial owners. This needs to be carried out by 31 January 2023.
A Register of Overseas Entities was announced by David Cameron back in 2016 at an anti-corruption summit held in London. Other jurisdictions also confirmed they would take similar steps, notable exceptions included the USA and the British Virgin Islands. The purpose of the development of a register was to target economic crime so that criminals could no longer purchase property in the UK and hide behind complex corporate structures to cover who actually owned the property.
It has taken some time for the bill drafted back in 2018 to materialise into the Economic Crime (Transparency and Enforcement) Act 2022, finally hastened by the Russian invasion of the Ukraine and the fresh desire to identify property linked to Russia and money laundering generally.
Steps that need to be taken
If an Overseas Entity purchased property, or has taken a 7 year or more lease, in England and Wales since 1 January 1999 then the Overseas Entity has until 31 January 2023 to report its beneficial ownership to Companies House.
Going forward, any Overseas Entities that purchases property, or has taken a 7 year or more lease, are now required to be registered at Companies House.
Lenders, borrowers and charges
Lenders to Overseas Entities will need to ensure finance documents are updated to include obligations for overseas borrowers to comply with registration requirements and make failure to do so an event of default.
Failure to comply
Failure to register new property acquisitions will mean that HM Land Registry will not register the Overseas Entity as the owner of the land.
Failure by an Overseas Entity to register property purchased after 1 January 1999 in England and Wales is a criminal offence with every officer potentially facing criminal charges including fines and prison sentences.
Conclusion and further guidance
This above is very much a high level overview but does require prompt action by any Overseas Entities that own property in the UK. Further detailed guidance can be found on the Companies House website or by speaking to us.
This is a complex area of law and this note is a guide only. For additional information specific to your circumstances, please contact James Oxley via email at James.Oxley@haroldbenjamin.com