24 November, 2022
Following the passing of the economic Crime (Transparency and Enforcement) Act 2022 (the Act), the Register of Overseas Entities (ROE) was created which is maintained by Companies House, and from 1st August 2022 any overseas entity that own or intends to acquire UK property, will be required to be registered on the ROE and give notification of their beneficial owners and managing officers. This will apply retrospectively to any overseas entity who have bought property since 1st January 1999 in England and Wales, and they will have until 31st January 2023 to register with Companies House. Furthermore, any overseas entities who disposed of any property after 28th February 2022, will need to register and give details of such disposals.
Under the Act, an overseas entity means a legal entity that is governed by the law of a country or territory outside the UK, and means a body corporate, partnership, or other entity that (in each case) is a legal person under the law by which it is governed. Companies incorporated in one of the Channel Islands, Isle of Man, Republic of Ireland are non-UK entitles and will therefore be subject to the Act.
The information required by Companies House includes:-
Verification checks will also need to be made against beneficial owners and managing officers of the overseas entity before it can be registered, and the checks should be carried no more than 3 months before registration. A UK regulated agent must carry out the verification checks who is supervised under the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017, and the agent will need to provide an agent assurance code. Once the overseas entity is registered, they will receive an Overseas Entity ID. Failure to comply with the Act is a criminal offence and could lead to a fine of £2,500 per day or imprisonment of up to 5 years.
The information supplied to Companies House about overseas entities and their beneficial owners and managing officers, will be publicly available on the Register of Overseas Entities but it will not show home addresses, full dates of birth (only month and year), the agent assurance code, date of verification, email addresses and information about trusts. Once registered, the overseas entity must file an annual update one year after it was registered and every year after to notify of any changes/ confirmation that the information held is still correct.
The Act has also made amendments to the Land Registration Act 2002, introducing a new Schedule 4A which came into force on 5th September 2022. The provisions of the Schedule mean that HM Land Registry cannot complete registration without an overseas entity having first obtained the Overseas Entity ID and in some instances, an overseas entity will require the ID before it makes any disposition. The HM Land Registry have introduced their updated prescribed forms, and prescribed clause LR3 of a prescribed clause lease to take to allow for the Overseas Entity ID to be provided. The HM Land Registry will also enter the following restriction on title registers where they are satisfied that the registered proprietor is an overseas entity and became registered as the proprietor on or after 1st January 1999:-
"After 31st January 2023 no disposition within section 27(2)(a), (b)(i) or (f) of the Land Registration Act 2002 is to be completed by registration unless one of the provisions in paragraph 3(2)(a)-(f) of Schedule 4A to that Act applies".
Therefore, failure to register with Companies House will mean any future dealing, purchase or disposition of property or land will be rejected by the HM Land Registry. Those acting for overseas entities or purchasing land or property from overseas entities will therefore need to ensure that registration has been completed in accordance with the Act and obtain the overseas entity ID to insert into legal documents.
If you have any further queries in relation to the Register of Overseas Entities and how this may affect your ongoing transaction please contact the Housing and Regeneration (Property) team.
For more information contact Shauna Helyer in our Housing & Regeneration department via email or phone on 01254 222395. Alternatively send any question through to Forbes Solicitors via our online Contact Form.
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