The UK Government has now implemented legislation to create full transparency regarding the ownership by non-UK legal entities (each an Overseas Entity or Overseas Entities) of title to property in the UK (UK Property).
This legislation is designed to combat economic crime, spurred on by the sanctions related to Russia. See our earlier update on the implications for BVI entities holding UK property or land here.
The new laws are introduced by a new piece of legislation called the Economic Crime (Transparency and Enforcement) Act 2022 (the ECA) which creates the Register of Overseas Entities (Register). Click here to view the ECA. Secondary legislation in respect of the Register came into force on 1 August 2022, creating a 6-month transitional period expiring 31 January 2023 within which to comply with the new registration requirements.
Stated aims of the ECA
- Create transparency of ownership for Overseas Entities that own UK Property
- Give UK authorities powers to confiscate unlawfully obtained wealth
- Remove current legal impediments to prosecution for breaching sanctions
- Introduce a Register that will require Overseas Entities owning UK Property to record information regarding beneficial ownership and officers.
Detail on the Register and Overseas Entities
The Register will be public upon completion of the registration process, and must be completed in the following situations.
- Any Overseas Entity with separate legal personality under its governing law of registration that has owned registered freehold or leasehold title to UK Property since 1 January 1999 in England or Wales, or since 8 December 2014 in Scotland, must register
- Any Overseas Entity wishing to purchase UK Property in any part of the UK must now register
- Any Overseas Entity intending to dispose of UK Property, or which has disposed of such land since 28 February 2022 must also register
The ECA does not apply to foreign individuals holding UK Property directly.
What information is entered into the Register
Information is submitted to and maintained by Companies House in the UK. Upon successful registration each Overseas Entity will receive an “overseas entity ID” on the new Register. Thereafter Overseas Entities are required to submit returns or updates annually.
The Overseas Entity must enter into the Register details regarding its name, legal personality, incorporation or registration, as well as details of its office bearers, owners and, if distinct, details of its beneficial ownership. Information uploaded must be verified by an independent UK-regulated agent, supervised under the UK Money Laundering, Terrorist Financing and Transfer of Funds Regulation 2017.
Although the information on the Register is freely available for inspection upon request, certain information including the residential address and date of birth of individuals will not be publicly available, for personal security reasons.
Consequences for Non-compliance
The “Transitional Period” of six months which ends on 31 January 2023, whereafter the following consequences may apply.
A failure by an Overseas Entity to register will result in restrictions on the sale of the property, alongside criminal penalties applicable to the entity itself and its officers, consisting of fines and/or up to five years imprisonment.
In England, Wales and Scotland the Registrar must enter a restriction against certain land already owned by an Overseas Entity. This will restrict the ability of the Overseas Entity to dispose, let or grant charges over the UK Property unless the entity has registered itself on the Register.
What actions should you take?
All Overseas Entity owning UK Property are recommended to undertake a review to determine whether they are in scope of the ECA.
Overseas entities in scope must (1) identify their registrable beneficial owners and (2) provide the required information about them to the Register. However, before the information can be filed on the Register, it must be independently verified (see above).
How can Marbury can help?
Marbury can assist with all requirements in relation to the Register.
This includes, amongst other services:
- Identification and verification of the required beneficial owner information for the overseas entity
- Registration with Companies House in the UK (subsequent to successful verification)
- UK legal advice, where required, in complex cases
- Ongoing annual filing and updates
We will contact clients that we know are in scope of the legislation.
If you have any queries, please contact us at email@example.com or reach out to your usual Marbury advisor.