BREAKING: UK introduces Register of Overseas Entities

On the 14th of March 2022, the UK government passed The Economic Crime (Transparency and Enforcement) Act 2022 which has introduced a Register of Overseas Entities.

Register of Overseas Entities

The act requires that all overseas entities which own or buy land in the UK must register with Companies House and register the entities beneficial owners. Once the entity has registered it becomes a ‘registered overseas entity‘.

The objective of the new law is to prevent economic fraud by preventing individuals from hiding their property ownership in companies and trusts.

Who does this apply to?

The new rules apply to any overseas persons who invest in land or property in the UK, including an:

• Overseas company or partnership
• Individual who is the beneficial owner of an overseas entity

A person is a beneficial owner if, they:

1. hold more than 25% of the shares or voting rights in that entity,
2. have the right to appoint or remove the majority of the directors of that entity; or
3. have the right to exercise, or actually do exercise, significant influence or control over that entity

When does the law come into effect?

The rules come into immediate effect and apply retrospectively to land or property bought up to 20 years ago in England and Wales, and those purchased retrospectively back to Decemeber 2014.

Affected property owners have until 14 September 2022 to comply with the rules effective.

What do Affected Owners need to do?

If you are affected by these new rules you must identify the beneficial owners and register with Companies House. Once registered, an overseas entity will be issued with an Entity ID Number and the entity will be required to submit an annual statement to Companies House.

What information is required to be provided?

To register, relevant entities will be required to provide the following information:

• name
• country of incorporation
• registered or principal office
• postal service address
• email address
• the legal form of the entity and the law by which it is governed
• any public register in which it is entered and, if applicable, its registraion number in that register

In addition, the information required in respect of the beneficial owner(s) is as follows:

1. name, date of birth and nationality
2. usual residential address
3. postal address
4. the date which the individual became a benficial owner
5. the condition which the the person is considered a beneficial owner
6. whether the preson meets the condition by being a trustee
7. whether the individual is a designated person of the Sanctionsand Anti-Money Laundering Act 2018

Other considerations

Any foreign entity selling properties between 28 February 2022 and the full implementation of the
register must:

1. Submit their details at the point of sale; as well as filing the relevant tax returns and paying any tax due;
2. Failure to comply with the Act’s registration obligations will constitute a criminal offence for both the entity and, importantly, each officer of that entity. The offence will be punishable by a daily fine (not exceeding £2,500), imprisonment of up to five years, or both; and
3. The Secretary of State may exempt a person from registration if it is “in the interests of the economic wellbeing of the United Kingdom.”