Register of overseas entities comes into force in the UK

The Register of Overseas Entities came into force in the UK on 1 August 2022 through the new Economic Crime (Transparency and Enforcement) Act 2022 (the Act). 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/or managing officers.

Who is impacted?

• Overseas entities who want to buy, sell or transfer property or land in the UK
• Overseas entities who already own or lease property or land in the UK. This applies to overseas entities who bought property or land on or after 1 January 1999 in England and Wales (on or after 8 December 2014 in Scotland, and on or after 1 August 2022 in Northern Ireland)
• Entities that disposed of property or land after 28 February 2022 will also need to give details of those dispositions

When do we need to register?

There is a six-month window from now until 1 February 2023 for all affected overseas entities to register details of themselves and their beneficial owners.

What information do we need to submit?

Information about the overseas entities, any registrable beneficial owners, managing officers, as well as our IQ-EQ UK-supervised agent that is required to carry out verification checks for all submissions, will need to be submitted. Information on the entity includes:

• Country it was formed in
• Registered office address and correspondence address
• Email address: to send important information, including the Overseas Entity ID
• Legal form and governing law
• Public register it appears on and its registration number (if it has one)

Information to be provided on the registrable beneficial owner includes:

• Name, date of birth and nationality
• Usual residential address
• A service address
• The date on which the individual became a registrable beneficial owner in relation to the entity
• Why they have been categorised as the owner

Does the information need to be verified before submitting?

Yes. Before an overseas entity registers its beneficial owners or managing officers on the register, a UK-supervised “relevant person” will need to verify the required information about them as set out in the Act. IQ-EQ has such a supervised business in the UK.

What are the consequences of non-compliance?

Failure to comply with the new requirements can have serious consequences, including restrictions on buying, selling, transferring, leasing or charging their property or land in the UK.  Also, overseas entities that don’t register by the deadline will face daily fines of up to £2,500 per day or up to five years in prison.

What if the UK property is owned directly by a trust?

Overseas entities are defined as “legal entities” like companies and certain partnerships but do not include trusts, noting that there is already a separate Trust Registration Service with the UK HMRC for such situations.  However, certain information on the trustees, settlors, protectors and/or beneficiaries may also need to be included on this new register (i.e. depending on the terms of the trust and if the property is held by an underlying overseas entity).

What are the other obligations required by the Act?

The Act further imposes an obligation on overseas entities to make an annual information update with Companies House.

How can IQ-EQ assist?

IQ-EQ can assist with both initial registration and ongoing filings, both from the perspective of the overseas entity and also in the UK in ensuring the validation requirement is met (by our UK supervised business). Get in touch for more information.