Ready, Steady, (almost) GO! The Register of Overseas Entities is live
The register of overseas entities managed by Companies House (the Register) is now live and accepting applications, but there is a short grace period until 5 September for the registration of land transactions. In this update we set out more detail as to the registration requirements and process and our thoughts as to what overseas entities should be doing now to ensure compliance.
The English government has established the Register with the intention of increasing “transparency”, to allow “law enforcement agencies to investigate suspicious wealth more effectively”. Essentially, any overseas entity which owns or is to acquire UK property will need to register, providing details about the entity itself and its beneficial owners. HM Land Registry will enter restrictions against the title of such property so preventing the overseas entity from entering into various property-related transactions unless it is on the Register. Failure to comply with the requirements to apply to be on the Register can constitute an offence.
Further detail about the Register and the obligations arising can be found in our earlier note on the topic (see our article here). Since that note’s publication, additional regulations have been published adding in extra layers of process.
The Register went live on Monday 1 August 2022, meaning that overseas entities can now apply to Companies House to be admitted to the Register.
The property-related provisions will however, only take effect on 5 September 2022. This grace period has been implemented to avoid property transactions being held up by the need to register. Its effect is that any overseas entity currently in the middle of a property acquisition which completes and in respect of which the application to register the transaction at the Land Registry is made before 5 September will not need to be on the Register in order to complete and make the necessary entries at the Land Registry. However, any overseas entity which intends to complete the purchase of any UK property and to apply to register the transaction at the Land Registry on or shortly after 5 September would be wise to apply to the Register now to ensure that the registration process does not delay completion. As from 5 September 2022, overseas entities will not be able to register a freehold interest or a lease exceeding seven years from the date of grant unless they are registered on the Register at the time the (Land Registry) application is made.
Any overseas entity which held UK property prior to 4 September 2022 will need to apply to register in any event by 31 January 2023 (i.e. six months from the Register going live). This registration obligation applies to overseas entities which became registered as proprietor of the UK property pursuant to an application to the Land Registry on or after 1 January 1999. However, bear in mind that where an overseas entity acquired UK property between 1 August 2022 and 4 September 2022, it will not be able to dispose of that property or grant a legal charge over it unless it is duly registered. (Overseas entities which acquired the UK property prior to 1 August 2022 will be able to make such a disposal without first being on the Register until 31 January 2023.)
Any overseas entity which has made a disposition of UK property since 28 February 2022 must provide details to Companies House by 31 January 2023. Where the overseas entity is obliged to register (because it still owns UK property), the details of such disposition must be provided at the time of its application to register.
To register, an overseas entity will need to provide certain information about itself and its beneficial owners (or if there are no beneficial owners, its managing officers) to Companies House. Pursuant to regulations published earlier in the summer, such information must first be verified by a “UK-regulated agent”. Registration will not be possible without this verification from a UK-regulated agent. The information must be verified not more than three months before the application to register is sent to Companies House.
Service providers such as accountancy firms and law firms are among those who may apply to become a UK-regulated agent but obviously, there are responsibilities, risks and potential liabilities which also come with the position. It is to be hoped that a publicly available list of such agents will become available in due course. The verification process is not exactly aligned with the requirements of anti-money laundering regulations, so overseas entities may find they are required to provide more detailed information than is ordinarily required for transactions.
The UK regulated agent can submit the registration application with the verification statement, or if the overseas company is making the application itself, the agent can provide the verification separately to Companies House by email within 14 days of the application being made.
Verification will also be required when the overseas company complies with its duty to update its entry on the register each year.
There is a registration fee of £100 payable to Companies House.
- Overseas entities which: (a) currently hold UK property; (b) disposed of UK property since 28 February 2022; or (c) intend to acquire UK property, should be collating the information required to register and submitting their registration applications to Companies House as soon as possible
- Acquisitions of a freehold interest or of a lease for a term exceeding seven years from the date of grant or the grant of a legal charge which are completed and registered at the Land Registry between 1 January 1999 and 4 September 2022 will not immediately be affected by the Register, but the purchaser should register as soon as possible (and must register by 31 January 2023)
- Acquisitions of a freehold interest or of a lease for a term exceeding seven years from the date of grant cannot be registered at the Land Registry after 5 September 2022 unless the overseas entity is on the Register
- Overseas entities must provide details of any disposal of a freehold interest or of a lease for a term exceeding seven years from the date of grant or the grant of a legal charge since 28 February 2022 to Companies House by 31 January 2023 whether or not the overseas entity in question needs to be on the Register
- The disposal of a freehold interest or of a lease for a term exceeding seven years from the date of grant or the grant of a legal charge by an overseas entity which acquired the property on or after 1 August 2022 will not be permitted unless the overseas entity is on the Register
- An overseas entity which acquired the property and applied to be registered at the Land Registry prior to 1 August 2022 can dispose of a freehold interest or of a lease for a term exceeding seven years from the date of grant or grant a legal charge in respect of the property before 31 January 2023 without first being on the Register, although it will still need to apply to the Register and provide details of the disposition by 31 January 2023.
This note reflects the law as at 1 September 2022. The circumstances of each case vary and this note should not be relied upon in place of specific legal advice.
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- The Register of Overseas Entities is Go! What does this mean for lenders?
- The Register of Overseas Interests and Corporate Transactions
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- Economic Crime (Transparency and Enforcement) Act 2022: What does the Register of Overseas Entities mean for lenders?
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