The launch of a new Register of Overseas Entities is expected next week, with the aim of forcing non-UK entities that hold UK property and land to submit information about their registrable beneficial owners and managing officers.
An individual, unless exempt from registration on the Register, is considered a ‘registrable beneficial owner’ if they are a beneficial owner of an overseas entity and: hold more than 25% of the shares or voting rights; have the right to appoint or remove a majority of the directors; or otherwise exercises or has the right to exercise significant control.
To be exempt, an individual must be a beneficial owner that holds an interest in an overseas entity through one or more legal entities that are subject to their own disclosure requirements; or have been exempted by the Secretary of State, in the interests of national security or for the purposes of preventing or detecting serious crime.
Companies House is expecting a commencement order to be laid before Parliament on 1 August 2022, with the intention of the Register coming into effect that same day.
The new regime will result in overseas entities with real estate assets in England and Wales (purchased on or after 1 January 1999) or in Scotland (purchased on or after 8 December 2012) having six months to submit the necessary information to Companies House.
A note recently issued by Companies House in the UK states: “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 – as set out in the Act.
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).
These supervised agents, as defined by the MLRs, are:
• 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
It is worth noting that a significant penalty of up to two years’ imprisonment as well as a fine for the officers of any such entity may be imposed on those that fail to meet these requirements. Furthermore, a restriction on the title register may be imposed, which would prevent the property from being sold, mortgages, or leased.
Upon registration of the overseas entity on the Register, it will be required to update its details on an annual basis to avoid facing fines of up to £2500 per day of default.
Some information from the Register is likely to be publicly available online i.e. the names of an overseas entities’ beneficial owners and managing officers unless they apply to have such information withheld from publication because doing so would put them at serious risk.
Full details of the notes issued can be found via the following two links: