We wrote extensively on 27 April 2022 in relation to the legal and practical implications of the Economic Crime (Transparency and Enforcement) Act 2022 (the Act) and the Register of Overseas Entities, and the impact this will have on overseas entities owning UK land. Here is a link to that article.
It is now expected that the Register of Overseas Entities will open on 1 August 2022 and with that in mind, here is the latest update:
- The Register of Overseas Entities will be administered by Companies House.
- Overseas entities holding UK land will be under an obligation to be come inscribed on the Register of Overseas Entities and will need to update the information on the register periodically.
- Once the Register of Overseas Entities goes live, the overseas entity must be registered at the time of the relevant transaction (unless such entity is under a legal obligation to complete the transaction that arose before the register became live, for example when contracts have been exchanged before the register became live).
- The significant consequence in relation to property transactions and conveyancing is that HM Land Registry will refuse to register property transactions involving overseas entities if (1) those overseas entities are not registered on the Register of Overseas Entities and (2) they have not duly complied with their obligations to update information. The transactions captured by the Act will include sales and purchases of land by overseas entities, security over land granted by overseas entities, and long leases.
- Other serious consequences of not complying include serious criminal penalties, fees and up to 5 years custodial sentence. Companies House will also be able to impose civil financial penalties and further sanctions.
- The Act has a retrospective effect and will apply to the overseas entities who have made a ‘relevant disposition of land’ on or after 28 February 2022 – the date the Economic Crime (Transparency and Enforcement) Bill was published. These overseas entities will still have to register details on the Register of Overseas Entities about their beneficial owners or managing officers at the time of the dispositions, as well as details about the dispositions, such as the title numbers of the land interests. This information will then be publicly available for at least 2 years.
- Once the register is live, overseas entities who already own land or property in England and Wales will be given 6 months to register their beneficial owners or managing officers.
- For the latest information to the Companies House blog, click here
Whilst further and more detailed guidance on the Register of Overseas Entities is yet to be provided by the UK Government, it is essential that all required overseas entities should begin their preparation for this now to avoid any criminal or civil penalties and delays in conveyancing process, or in granting of security over UK land. This could be quite time-consuming, and an onerous process, particularly for sophisticated ownership structures.
HM Land Registry will be issuing separate practice guidance which will explain the land registration requirements to register an overseas entity as proprietor of an estate in land or for an application that includes some types of disposition made by an overseas entity.
Until the Register of Overseas Entities goes live, and we can observe first hand how the sanctions are applied, it remains to be seen how this process will work in practice.
For our part, F&F LLP UKRE team are keeping a close eye on any further legal and practical developments in this regard, and we will be providing further updates on this topic at the right time as things develop.
If you need any further information or legal advice, including conveyancing of a property in England & Wales please contact our UKRE team Anna Douglass, Alastair Hargreaves or Caren Vidamour who will be delighted to help.