The Register of Overseas Entities came into force in the UK on 1 August 2022. If you are an overseas entity who is in the process of buying, selling or transferring property then find out what steps you need to take in order to avoid hefty fines.
Over the last few years, the UK Parliament has attempted to put in place actions in order to create more transparency around the beneficial ownership of property in the UK. The introduction of the Economic Crime (Transparency and Enforcement) Act 2022 (ECTE Act) is the latest in an attempt to counter illegal activities. The ECTE Act received Royal Assent on 15 March 2022.
As a part of the Act, any overseas entity that acquires UK property will need to register with Companies House before applying to register its land acquisition with the Land Registry.
What is the Register of Overseas Entities?
As mentioned above, overseas entities who want to buy, sell or transfer property or land in the UK, must register with Companies House and let them know who their registrable beneficial owners or managing officers are.
An overseas entity can be classified as a legal entity, such as a company or other organisation, that has legal personality (i.e., a company that can enter into legal contracts and who is able to sue and be sued such as a corporation, branch or subsidiary) and is governed by the law of a country or territory outside the UK.
Overseas entities that already own or lease land or property in the UK will also need to register with Companies House and notify them of who their registrable beneficial owners or managing officers are by 31 January 2023.
This applies to overseas entities who bought property or land on or after:
- 1 January 1999 in England and Wales
- 8 December 2014 in Scotland
Entities that disposed of property or land after 28 February 2022 will also need to give details of those properties. This information will be publicly available for at least two years.
See also: Why the UK is still one of the best countries for business expansion
What is a beneficial owner?
A beneficial owner is any individual or entity that has significant influence or control over the overseas entity. It can be:
- An individual person
- Another legal entity, such as a company
- A government or public authority
- A trustee of a trust
- A member of a firm that is not a legal person under its governing law
What you need to do
You’ll need to provide information to Companies House via the ROE online service about:
- The overseas entity
- Any registrable beneficial owners
- The UK-regulated agent that carried out verification checks
You may also need to provide information about managing officers.
Different information needs to be provided depending on the nature of the beneficial owner. The Home Office has provided guidance on this on their website.
See also: Sole trader, LLP, subsidiary - what’s the best company structure for your UK business?
What happens after an overseas entity is registered
If the application is accepted, the overseas entity and its beneficial owners and managing officers will be added to the Register of Overseas Entities. Once added to the ROE, Companies House will issue an overseas entity identification registration number (OEID), which will then be used for Land Registry applications. The OEID will be added to the proprietorship register on the official copies of the property held by the Land Registry. The OEID will also need to be added to certain prescribed form documents (e.g., transfers and leases).
The overseas entity must file an annual update one year after it was registered, and every year after that. This is to inform of any changes or that the current information held is still correct. The update must be filed within 14 days of the due date.
What action should you take?
If you are in the process of a UK property transaction, then you will first have to be on the ROE before you will be able to register any land ownership with the Land Registry. If you have a property transfer coming up, then it would be best to get on the Register now.
Those who already hold UK property within overseas entities or have disposed of it since 28 February 2022 do not need to take urgent action. However, they should seek advice on their position and prepare for registration ahead of the anticipated deadline of 31 January 2023.
If you do not comply with the ECTE Act, you could be fined up to £2,500 per day or get a prison sentence of up to five years. You’ll also face restrictions when buying, selling, transferring, leasing or charging property or land in the UK.
If you’re an overseas entity who needs guidance on this new requirement, then get in touch with our SME team who will be able to tell you how to proceed.
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