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New Companies House Register of Overseas Entities and Their Registrable Beneficial Owners

August 2022

Overseas entities owning ‘qualifying estates’ in the UK, since 01 January 1999, must now register at Companies House on the Register of Overseas Entities by the 31 January 2023. Failing to comply with the provisions of the Act will result in the overseas entity, and any officer of that entity in default, committing a criminal offence which may be punishable by: 1) a daily fine of up to £2,500; 2) imprisonment of up to five years; 3) or both.

What is an overseas entity?

Overseas entities include a company, partnership or other legal body which is governed by the law or territory outside of the United Kingdom. It does not include an individual or a non-UK trust.

What is a qualifying estate?

It is a freehold estate or leasehold estate of land granted for a term of more than 7 years.

Applying to Companies House

The overseas entity will need to provide certain information to Companies House about the overseas entity and about the beneficial owners who must be registered. The Act specifies what information must be provided to Companies House and details of who is a beneficial owner.

The information regarding the beneficial owners must be verified by a third party (such as an external accountant, independent legal professional, and estate agent or letting agent who is regulated under the money laundering regulations). For those professionals who may be required to complete verification checks, technical guidance is available: Register of Overseas Entities: guidance on registration and verification.

The application must also contain a number of statements (which are set out in the Act) that the overseas entity must make about identifying its registrable beneficial owners. The overseas entity will also need to provide information about any relevant dispositions (transfer, grant of a legal charge or grant of a lease for more than 7 years), since the 28 February 2022 and the end of the transitional period, being 31 July 2023. They must also provide information as to who the registrable beneficial owners were immediately before the relevant disposition was made.

Once registered, the overseas entity will receive a new overseas entity ID number.

Unregistered overseas entities

To avoid parties entering into a quick sale prior to the Act coming into force, certain unregistered overseas entities need to provide information to Companies House about any relevant dispositions (transfer, grant of a legal charge, or grant of a lease for more than 7 years), since the 28 February 2022 and the end of the transitional period, being 31 July 2023. They must also provide information as to who the registrable beneficial owners were immediately before the relevant disposition was made.

Updating Duty

Once registered, the overseas entity must update the information on the register annually. Failure to do so will be a criminal offence.

Land Registry Restrictions

HM Land Registry will now automatically place restrictions on the titles of registered qualifying estates owned by overseas entities. For certain dispositions (transferring the title, granting a charge, or the grant of a lease for a term of more than 7 years), the overseas entity will either need to be registered on the register for overseas entities, exempt from registration, or an exception must apply, in order to comply with the restriction.

Applying to HM Land Registry

Those overseas entities purchasing a qualifying estate in the UK will need to be registered on the register at the time they apply for registration at HM Land Registry, otherwise their application may be cancelled.

They will need to add the overseas entity ID number as part of their application to HM Land Registry from the 05 September 2022.

Legislation has been passed to amend the wording of the Land Registry Prescribed Clauses which must be included in all registrable leases. The template commercial leases have been updated to include the amended wording to the prescribed clauses.

The new public register at Companies House was launched on the 01 August 2022. Further guidance from Companies House and HM Land Registry can be found here.

If you have any concerns about these new registration requirements, you should seek independent legal advice.

The contents of this Newsletter are for reference purposes only and do not constitute legal advice. Independent legal advice should be sought in relation to any specific legal matter.

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