The UK’s New Register of Overseas Entities 

The UK’s New Register of Overseas Entities was established by the Economic Crime (Transparency and Enforcement) Act 2022, and came into force on 1 August 2022.

The New Register of Overseas Entities is held by Companies House and requires overseas entities that own land or property in the UK to declare their beneficial owners and managing officers. A managing officer is an individual responsible for the day to day operation of the company. 

Those who do not comply could be heavily penalised, including restrictions on buying, selling, transferring, leasing or charging their land or property in the UK.

What is an overseas entity?

An overseas entity is a legal entity, for example a company or other organisation. It must be governed by the law of a country or territory outside of the UK.

The Republic of Ireland is an overseas jurisdiction for the Register of Overseas Entities.

What is a beneficial owner?

A beneficial owner is any individual or owner that has significant influence or control over the overseas entity ranging from an individual person to a public organisation. Other examples of a beneficial owner include:

• A company; 
• A government authority; 
• A trustee; or
• A member of a firm that is not a legal person under its governing law.

Every beneficial owner with a nature of control must be registered – see below.

What are the ‘natures of control’?

The ‘natures of control’ are ways in which an entity benefit from or has sufficient influence over a legal entity to warrant registration. One or more of the following natures must be satisfied:

The beneficial owner is an individual person, other legal entity, government or public authority and:

• holds, directly or indirectly, more than 25% of the shares in the entity;
• holds, directly or indirectly, more than 25% of the voting rights in the entity;
• holds the right, directly or indirectly, to appoint or remove a majority of the board of directors of the entity; or
• has the right to exercise, or actually exercises, significant influence or control over the entity.

The beneficial owner is a trustee of a trust and:

• the trustees of that trust holds, directly or indirectly, more than 25% of the shares in the entity;
• the trustees of that trust holds, directly or indirectly, more than 25% of the voting rights in the entity;
• the trustees of that trust holds the right, directly or indirectly, to appoint or remove a majority of the board of directors of the company; or
• the trustees of that trust have the right to exercise, or actually exercise, significant influence or control over the company.

The beneficial owner is a member of a firm that is not a legal person under its governing law and:

• the members of that firm hold, directly or indirectly, more than 25% of the shares in the entity;
• the members of that firm hold, directly or indirectly, more than 25% of the voting rights in the entity;
• the members of that firm hold the right, directly or indirectly, to appoint or remove a majority of the board of directors of the company; or
• the members of that firm have the right to exercise, or actually exercise, significant influence or control over the company.

The 25% threshold reflects the current standard applied in anti-money laundering legislation.

What do you need to do?

Overseas entities who want to buy, sell or transfer property or land in the UK, must register with Companies House and inform it of who their registrable beneficial owners or managing officers are.

Overseas entities who already own or lease land or property in the UK will also need to register with Companies House and inform it of their registrable beneficial owners or managing officers are by 31 January 2023, which you can do so here.

This applies to overseas entities who bought property or land on or after:

• 1 January 1999 in England and Wales;
• 8 December 2014 in Scotland; and
• 1 August 2022 in Northern Ireland.

Entities that disposed of property or land after 28 February 2022 will also need to give details of these dispositions – including transfers, the grant of many leases, the creation of easements and the grant of a legal charge.

What happens after registering?

If the application is accepted, the overseas entity and its beneficial owners and managing officers will be added to the Register of Overseas Entities. The application may not be accepted, for example, if the entity is non-compliant at the time of the application.

After registering, the overseas entity will get a unique Overseas Entity ID. This ID can be provided the Land Registry when the overseas entity buys, sells, transfers, leases or charges UK property or land.

Overall, the Register of Overseas Entities will create a more transparent real estate environment. It also strengthens law enforcement agencies’ ability to investigate suspicious wealth.

What could happen if you don’t comply with the Act?

There are heavy penalties for non-compliance, which could range from a fine of up to £2,500 to receiving a prison sentence of up to five years.

As well as these penalties, you could also face restrictions when trying to sell or lease land – such as having to have registered at Companies House before completing it acquisition or financing.

If you have any questions regarding corporate law or need further help with any of the above, please contact us here.