James Oxley
Overview
On 01 August 2022 the Register of Overseas Entities was established at Companies House, the UK company registry. Companies House is the body in the UK where companies are incorporated and required to file certain documents such as annual financial statements and details of directors and shareholders.
The Register of Overseas Entities requires that overseas entities (broadly being non-UK companies and other similar bodies) that own land or property with a lease of seven or more years in the UK register the details of their ultimate beneficial owners.
Unusually for UK law, this requirement will have the retroactive effect in that any overseas entities that purchased or leased land in England or Wales on, or after, 01 January 1999 will also need to register the details of their beneficial owners. Registration is required by 31 January 2023.
Background
The Register of Overseas Entities was announced by Britain’s then prime minster, David Cameron, in 2016 at an anti-corruption summit held in London. Other jurisdictions also confirmed they would take similar steps; notable exceptions included the United States 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 conceal who owned the property. It has taken some time for the law drafted back in 2018 to materialise into the Economic Crime (Transparency and Enforcement) Act 2022, finally hastened by the Russian invasion of Ukraine in February 2022, and the fresh desire to identify property linked to Russians and money laundering generally.
Steps that need to be taken
If an overseas entity has purchased property or taken a lease for seven or more years in England and Wales since 01 January 1999, the overseas entity has until 31 January 2023 to report its beneficial ownership to Companies House.
Going forward, any overseas entities that purchase property, or take a seven year or more lease, are now required to be registered at Companies House.
Failure to comply
Failure to register new property acquisitions will mean that HM Land Registry (the government body which registers the ownership of land and property) will not register the overseas entity as the owner of the land.
In England, the rights of land and property owners depend in general terms on registration, so non-registration could have serious consequences.
Failure by an overseas entity to register property purchased in England and Wales after 01 January 1999 is a criminal offence, with every officer potentially facing criminal charges including fines and prison sentences.
Conclusion and further guidance
The information provided above is very much a high-level overview but does require prompt action by any overseas entities that own or have acquired the lease of property in the UK. We are pleased to provide further detailed guidance.
XLNC MAGAZINE | No. 10 | Autumn 2022