The register of overseas entities is a new public register to be kept by Companies House, with information about the beneficial owners of overseas entities that own land in the UK. The requirements for the register have been introduced under the Economic Crime (Transparency and Enforcement) Act 2022 for transparency behind the screen of offshore structures, as a measure to combat financial crime.
This article covers the following topics:
- Who needs to register as an overseas entity
- What does the register of overseas entities contain?
- Who is a registrable beneficial owner of an overseas entity?
- What information do overseas entities need to provide?
- What are the ongoing reporting requirements for overseas entities?
- When do you have to register as an overseas entity?
- What happens if you fail to register as an overseas entity?
- What happens if you provide false information?
- When does the Economic Crime (Transparency and Enforcement) Act 2022 come into force?
- Concluding remarks
1. Who needs to register as an overseas entity?
The new regime, which is yet to come into force, generally requires any corporate body or other legal entity that is governed by the laws of a country outside the UK to apply to Companies House for registration as an overseas entity, if the entity purchases or is already registered as the proprietor of any freehold or long leasehold (for an original term of more than seven years) estate in UK land.
2. What does the register of overseas entities contain?
The register of overseas entities will contain the names of all registered overseas entities and details of their registrable beneficial owners and/or managing officers, as applicable. It will also include copies of the documents and information required to be delivered or included in the register by the Economic Crime (Transparency and Enforcement) Act 2022 or relevant secondary legislation.
3. Who is a registrable beneficial owner of an overseas entity?
The definition of a “registrable beneficial owner” in relation to an overseas entity is broadly similar to a person with significant control in relation to an English company, and means any non-exempt individual, company subject to its own disclosure requirements, or government or public authority, that directly or indirectly meets any of the following ownership conditions in relation to the overseas entity:
- they hold more than 25% of the shares or voting rights;
- they have the right to appoint or remove a majority of the board of directors;
- they otherwise exercise significant control or influence; or
- they exercise significant control or influence over the activities of a trust, partnership or other non-legal entity whose trustees or members meet any of the above conditions.
4. What information do overseas entities need to provide?
An application to Companies House for registration as an overseas entity must include the following:
- confirmation that the entity has taken reasonable steps to identify any registrable beneficial owners and to obtain all required information for any it identifies;
- compliance with any verification requirements under regulations to be made (none exist at the date of this article) by the Secretary of State for Business, Energy and Industrial Strategy; and
- if the entity has identified all its registrable beneficial owners – a statement to that effect together with the requisite information for the entity and its beneficial owners; or
- if the entity believes there is any registrable beneficial owner it has not identified – a statement to that effect together with the requisite information for the entity, its managing officers and (as far as possible) its beneficial owners; or
- if the entity is satisfied does not have any registrable beneficial owners – a statement to that effect together with the requisite information about the entity and its managing officers.
The requisite information concerning the overseas entity includes its name, country of incorporation, registered or principal office, service address, an email address, the legal form of the entity, the law by which it is governed, any public register in which it is registered, and the registration number.
The requisite information for a registrable beneficial owner includes their name, service address, the date on which they became a registrable beneficial owner, which ownership condition they meet, whether they meet that condition as a trustee, whether they are a designated person (as defined in the Sanctions and Anti-Money Laundering Act 2018), as well as (for individuals) their date of birth, nationality and usual residential address, or (for legal entities) its registered office, the legal form of the entity, the law by which it is governed, any public register in which it is registered, and the registration number.
The requisite information in relation to managing officers includes name, date of birth, nationality, any former names, usual residential address, service address, business occupation, and a description of their roles and responsibilities in relation to the overseas entity.
We would expect all of the above will be provided in a new Companies House form to be published in due course.
5. What are the ongoing reporting requirements for overseas entities?
Following initial registration, a registered overseas entity will need to file an annual statement at Companies House confirming whether anyone has become or ceased to be a registrable beneficial owner of the entity during the relevant year and (if so) provide the relevant required information where any changes have taken place.
If a registered overseas entity ceases to hold a relevant interest in UK land then an application can be made to remove the entity from the register of overseas entities.
6. When do you have to register as an overseas entity?
After the overseas entities register provisions come into force:
- an overseas entity must be registered as an overseas entity (or be exempt) before applying to HM Land Registry to be registered as the owner of a freehold or long leasehold estate; and
- any overseas entity that already owns a freehold or long leasehold estate in the UK (and became the owner on or after 1 January 1999) must register as an overseas entity within the six months “transitional period” after the overseas entities register provisions come into force.
7. What happens if you fail to register as an overseas entity?
An overseas entity will not be registered as the owner of UK property, and is prohibited from making any registrable disposition (sale, grant of a long term lease, or grant of a legal charge) of such property, unless the entity has completed the relevant registration requirements as to the overseas entity register. Any attempted disposal in breach of these requirements is a criminal offence by the entity and its officers in default, punishable by a fine and/or imprisonment.
8. What happens if you provide false information?
It is a criminal offence to deliver or make any false, misleading or deceptive document or statement in a material particular, punishable by a fine and/or (in aggravated cases) by imprisonment.
9. When does the Economic Crime (Transparency and Enforcement) Act 2022 come into force?
The Economic Crime (Transparency and Enforcement) Act 2022 received royal assent on 15 March 2022. However, the provisions of the Act relating to the overseas register are not yet in force and will become effective when decided by the Secretary of State for Business, Energy and Industrial Strategy.
There is currently no specific definitive commencement Date. Companies House indicates that work on the register is progressing at pace and a launch date will be confirmed once relevant secondary legislation has been effected.
10. Concluding remarks
Any overseas entity that intends to purchase, sell, or grant any lease or charge over UK property should obtain specific legal advice in relation to the overseas entity regime. This will similarly be of concern for any lender to an overseas entity in relation to new mortgages. Overseas entities that already hold UK property will likely benefit from taking steps now to identify their registrable beneficial owners and managing officers to ensure readiness to provide the requisite information and statements in due course.
This article is provided by Burlingtons for general information only. It is not intended to be and cannot be relied upon as legal advice or otherwise. If you would like to discuss any of the matters covered in this article, please contact Paramjit Sehmi or write to us using the contact form below.