Overseas entities registration

From 1st August The Register of Overseas Entities (Verification and Provision of Information) Regulations 2022 regulations have come into effect affecting any overseas entity with UK property or land.

Under the new Economic Crime (Transparency and Enforcement) Act, there is a Register of Overseas Entities held by Companies House. Overseas entities which own a ‘qualifying estate’ of land in the UK need to provide PSC information to Companies House to be entered on an Overseas Entities Register.

This new register forms part of the UK government strategy to combat economic crime, while making sure that legitimate businesses continue to see the UK as a great place to invest.

If you are an overseas entity with or wanting to buy a qualifying estate or land in the UK, you need to read on...

What should be declared on the register of overseas entities?

The new register will require overseas entities that own UK land or property to declare their beneficial owners and/or managing officers.

What is an overseas entity?

Entities that are included in the act are defined as an ‘overseas entity’ if it is a legal entity that is governed by the law of a country or territory outside the UK and ‘legal entity’ is defined as a body corporate, partnership or other entity that is a legal person under the law by which it is governed. The definition includes non-UK incorporated companies, even if the company is UK tax resident.

Registering at companies house

Any overseas entities will need to apply to Companies House to register and supply the information set out in the Act. They will need to also provide a statement that they have taken all reasonable steps to identify any registrable beneficial owners in relation to the entity.

Verification

Before an overseas entity registers its beneficial owners or managing officers on the new Register of Overseas Entities, a UK-supervised ‘relevant person’ will need to verify the required information about them.

These verification checks must be carried out by a UK-based agent that’s supervised under the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017 (the MLRs).

A UK regulated agent is defined as:

• credit institutions.
• financial institutions.
• auditors, insolvency practitioners, external accountants, and tax advisers.
• independent legal professionals.
• trust or company service providers.
• estate agents and letting agents.

Using an accountant, such as dns accountants will make the process quicker and easier. The registration may take longer to process if the overseas entity completes the registration themselves.

Details about the person who verified the required information about the beneficial owner or managing officer will be on the public register.

The person verifying the required information cannot be a family member or a known close associate of the individual, and they cannot verify information about themselves.

Property in the UK registered at HM Land Registry

The 2022 Act is retrospective and will affect property in the UK and leases registered since 1 January 1999 that are in the ownership of an overseas entity.

HM Land Registry will work through its registered titles and where needed; they will enter a restriction in the register of titles owned by the overseas entity. The restriction placed by HM Land Registry means that they cannot transfer the freehold, grant of lease of morethan 7 years or enter into a legal charge unless registered on the Overseas Entities Register.

An overseas entity must register itself on the Overseas Entities Register. The overseas entity must either confirm that it has not made any ’relevant dispositions of land’ on or after 28 February 2022. A relevant disposition is a transfer, the grant of a lease for more than seven years and the grant of a legal charge.

These overseas entities must still register details on the Register of Overseas Entities about their beneficial owners or managing officers at the time of the disposition(s), as well as details about the disposition(s), such as the title number(s) of the land interests. This information will be publicly available for at least 2 years.

Property transactions

An overseas entity will not be able to register at HM Land Registry the acquisition of a freehold or lease of 7 years or more unless it can provide an ID, or it is exempt.

When registered, HM Land Registry will enter a restriction, and this means as per above that a disposition of the property won’t be allowed unless the overseas entity is registered on the Register of Overseas Entities.

It’s important to note that a restriction doesn’t prevent a transaction proceeding, but it will prevent registration and the legal estate passing to a buyer. The legal estate will remain with the seller, which will create problems in the future.

Solicitors will be checking contract terms and should ensure the overseas entity is registered at the time of completion.

Updating and removing information from the register

Registration requirements for Companies House are that the registration must be updated every 12 months from the original registration date.

If you wish to remove an entity from the register, you will be required to submit a statement confirming that the entity is no longer registered as the proprietor of the relevant interest in land.

Overseas entities register - sanctions and fines

There will be severe sanctions for those who do not comply, including restrictions on buying, selling, transferring, leasing or charging their land or property in the UK.

Anyone who breaks any rules relating to the registration of overseas entities could face a fine of up to £2,500 per day or up to 5 years in prison.

Summary

If are an overseas corporate entity with UK property or land and you’re affected by this legislation you need to gather the information needed to register with Companies House on the new Register of Overseas Entities and instruct a supervised agent in the UK to handle the registration requirements for you.

For more information, please contact dns on 0330 088 6686, or email on enquiry@dnsaccountants.co.uk.

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