2 May 2022
On 15 March 2022, the Economic Crime (Transparency and Enforcement) Bill (the Bill) received Royal Assent becoming the Economic Crime (Transparency and Enforcement) Act 2022 (the Act), following which, a new Register of Overseas Entities is currently being created by Companies House.
Does it impact me?
The new register will impact overseas entities that own UK land to declare their beneficial owners or managing officers. The Act applies to land bought since January 1999 in England and Wales, since December 2014 in Scotland, and to land bought from the day the Act comes into force in Northern Ireland.
An “overseas entity” means a legal entity that is governed by the law of a country or territory outside the United Kingdom, and a “legal entity” means a body corporate, partnership or other entity that (in each case) is a legal person under the law by which it is governed. Non-UK trusts are not “overseas entities” as they do not have a separate legal personality (but those that hold UK property indirectly through an overseas entity would meet the definition), and registration of trustees and anyone with significant control over the trust would be registrable.
Companies incorporated in the Republic of Ireland fall under the definition of an “overseas entity”.
What is the impact?
Overseas entities will not be able to buy, sell, transfer or lease land, or create a charge against the land in the UK unless they’ve registered with Companies House.
Overseas entities that already own land in the UK will be given six months to register their beneficial owners or managing officers, commencing with the date the register has been launched. As at the date of writing, the register and processes for registration are being developed.
Any new purchasers will need to register with Companies House from the day the register comes into effect.
Once the overseas entity has registered and provided all the necessary information, an overseas entity ID will be provided by Companies House. This ID will then need to be shared with the relevant land registry (depending on where the land is situated in the UK) whenever the overseas entity buys, sells, transfers, leases or charges land in the UK.
It is expected that overseas entities will need to update the information on the register every year, we expect, much like the annual confirmation statement filing obligation for companies in the UK.
After registering, the name of the overseas entity and its beneficial owners will be publicly available.
Overseas entities who do not register will face severe sanctions such as daily fines and not being able to transact with their land.
Companies House have announced that they will be write to all identified overseas entities captured by the Act who own land in England, Wales and Scotland to make sure they know about their new responsibilities.
When will the register be launched?
A date has not yet been announced. Secondary legislation and guidance is currently being drafted.
For further information on any of the points above contact
Mikita Makayou at mikita@lexefiscal.com, or
David Taylor at david@lexefiscal.com.