Register of Overseas Entities

In an attempt to create more transparency around the beneficial ownership of UK property, a new Register of Overseas Entities (ROE) has been introduced from 1 August 2022.

Applicability

The introduction of the ROE means that any overseas entity that wishes to buy, sell, lease or charge property in the UK will be required to disclose details of its beneficial owners and/or managing agents before applying to register any disposition of interest in UK real estate with the Land Registry.

This requirement also applies to overseas entities who currently hold property or land in the UK which;

was bought on or after 1 January 1999 if in England and Wales;
8 December 2014 if in Scotland; or
1 August 2022 if in Northern Ireland.

The entity must submit their information by 31 January 2023 to avoid receiving a fine or facing other criminal sanctions or civil penalties for non-compliance.

Overseas entities that disposed of UK-based property or land between 28 February 2022 and 31 January 2023 will also be required to provide the same details in respect of those dispositions.

Companies House registration

The application to the ROE will require certain basic details about the overseas entity, as well as information about the beneficial owners or managing agents of the entity. If any trustees of a trust are registrable beneficial owners, information about the trust will also need to be provided, including details of current or past beneficial owners, beneficiaries of the trust and other interested persons.

Companies House has produced a guidance notice which sets out in more detailed terms the information that will be required, as well as what falls within the scope of the legislation.

Verification

Before an overseas entity can apply to register the details of its beneficial owners or managing agents on the ROE, this information will need to be verified by a UK-supervised “relevant person”.

The person carrying out the verification will need to be a UK-based agent who is supervised under the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017.

Land Registry registration requirements

Once the details have been verified and the application has been accepted by Companies House, the information about the overseas entity will be published in the ROE and the entity will be given a unique Overseas Entities ID (OEID).

With effect from 5 September 2022, an overseas entity will need to present their OEID to the Land Registry as a pre-requisite to the registration of any disposition. The OEID will be included in the information about the entity on the proprietorship register on the official copies of the property’s title.

Sanctions

If a foreign company does not comply with the new obligations, its managing officers can face criminal sanctions, including fines of up to £500 per day or a prison sentence of up to 5 years. Civil sanctions will also be introduced in the form of financial penalties and an overseas entity will face restrictions when trying to sell or lease their property.

Conclusion

As requirements have now come into force, it is crucial that overseas entities who hold UK property (or have disposed of UK property since 28 February 2022) urgently seek advice on their position and prepare for registration ahead of the deadline on 31 January 2023 to avoid receiving a penalty for non-compliance.

Wallace LLP is prepared to advise clients on the relevant corporate and property law implications of the new legislation.