The register of Overseas Entities is a register to show the beneficial or, in other words, the actual owners of UK properties. The previous system did not require a company (owning a UK property) to disclose the details of who owns or controls that company or the parent company, which gave a loophole to disguise ownership which could be used to hide criminal activity.
The new register is administered by Companies House and publicly searchable like the person with significant control (PSC) register.
Who does this affect?
This may affect any overseas entity – a company or corporate body which has a legal personality in its home jurisdiction – owning UK real estate from 28 February 2022 onwards. This includes any beneficial owners or managing officers of the entity.
A beneficial owner is a person who holds directly or indirectly more than 25% of the share value or 25% of the voting rights of the company, or someone who has significant influence and control over the company.
If there are no registrable beneficial owners or these cannot be identified, managing officers are registered instead. A managing officer is a director, manager or company secretary of the company.
The location of the UK real estate is relevant, as a company only needs to register if it owns land purchased in England and Wales from 1 January 1999, in Scotland from 8 December 2014 or land purchases in Northern Ireland from 1 August 2022.
What is the process for registration?
The company must first identify all registrable beneficial owners or managing officers and obtain the necessary information. This information must then be verified by a UK-regulated agent, for example certain accountants, tax advisers or legal professionals.
The company must then register with Companies House and supply basic company information and contact details, in addition to information about its beneficial owners or managing officers; including names, dates of birth, addresses, nationality and dates of their involvement with the named entity. The application to register must be lodged with Companies House who will issue an Overseas Entity Identification number. This identification number will be needed to carry out any transactions with UK land.
There is an interaction with other registers such as the Trust Registration Service (TRS) and the PSC. For example, a Trust will need to be included on the register of Overseas Entities, where the trustees are beneficial owners.
The process is undertaken via Companies House and can be completed by an agent on behalf of the business entity.
What are the timescales?
For existing landowners, registration must be completed by 31 January 2023. In addition, a confirmation or corrective account is required within 14 days of the annual anniversary of the first registration. Failing to comply will constitute a criminal offence and will mean that no transactions can take place with the land in question and there is a financial criminal sanction of a fine of up to £2,500 per day.
It is also retrospective, meaning any overseas entities that sold UK land from 28 February 2022 (when the legislation was first announced) may also need to disclose their beneficial ownership information. This is intended to stop any overseas entities from avoiding registering by selling their land.
Crucially, for those businesses seeking to purchase UK land for the first time or sell land they currently hold, the registration must be completed and the Identification number obtained, before the transaction can be completed.
If this affects you, please don’t hesitate to get in touch with us to establish what needs to be done. It is likely that we will be able to provide the necessary information for the register and as a UK regulated agent, we can verify information regarding beneficial owners and we will support you to ensure you comply with the regulations.