In an attempt to crackdown on foreign criminals using property to launder money, the UK government has, for a number of years, attempted to introduce a register of those overseas entities which hold UK property.

The register will primarily provide information for law enforcement to help track down individuals using property as a money laundering vehicle whilst requiring anonymous foreign owners to reveal their identity to ensure criminals are unable to hide behind secretive chains of shell companies.

The register is also designed to level the playing field for UK companies who already need to disclose their beneficial owners to Companies House and will impose sanctions for non-compliance including restrictions on registering or disposing the title of the land.

What is an overseas entity?

The Act defines an overseas entity as a legal entity that is governed by the law of a country or territory outside the UK (which will capture entities created in the Channel Islands and Isle of Man). For these purposes a “legal entity” includes any entity which is a legal person under the law by which it is governed (for example, non-UK incorporated companies; LLPs; foreign foundations and non-UK partnerships with a legal personality). In addition, individuals who have significant influence or control over an overseas entity (e.g. they hold 25% or more of the shares or voting rights of the overseas entity) will be treated as “beneficial owners” for the purposes of disclosures. Non-UK Trusts are not “overseas entities” as they do not? have a separate legal personality (but those that hold UK property indirectly through an overseas entity will be caught).

What is a beneficial owner?

A beneficial owner is an individual, government, public authority or other legal entity who meets one or more of the following conditions in relation to the overseas entity:

They hold (directly or indirectly) more than 25% of the shares in the overseas entity
They hold (directly or indirectly) more than 25% of the voting rights in the overseas entity
They have the right (directly or indirectly) to appoint or remove a majority of the board of directors of the overseas entity
They have the right to exercise or actually exercise significant influence or control over the overseas entity and
In relation to trusts, partnerships and other entities that are not legal persons under the law by which they are governed; if the trustees of the trust or members of the partnership, unincorporated association or other entity meet any of conditions 1-4 above then the beneficial owner will consist of any person who has the right to exercise or actually exercises significant influence or control over the activities of that trust or overseas entity

What is property defined as and what is the case if I already own property?

Property is defined as either commercial or residential registrable land i.e. freehold or leasehold estates where the lease granted is for more than seven years. An overseas entity will have to retrospectively apply to register with details of any property bought since January 1999 in England and Wales and since December 2014 in Scotland.

What will happen if an overseas entity does not comply?

If an overseas entity does not comply with the new obligations its managing officers can face criminal sanctions including fines of up to £500.00 a day or a prison sentence of up to five years. The government have stated that they will also be introducing civil sanctions in the form of financial penalties and an overseas entity will face restrictions when trying to sell or lease the land. If the overseas entity is already registered as owners of the land but do not comply they will face restrictions over dealing with the land.

What will an overseas entity who owns or wishes to own land in the UK have to do?

An overseas entity will be required to identify its beneficial owner(s) and to register them with Companies House. Information supplied to the registrar will require verification.

Once registered an overseas entity ID number will be provided by Companies House and the entity will be required to update its information annually until such time as it successfully applies to be removed from the live register of overseas entities.

To register title to land an overseas entity will have to demonstrate it is registered and must comply with the duty to update information.

What, in more detail, will an overseas entity be required to provide?

An overseas entity will need to provide basic details of itself, country of incorporation/formation, registered principal office, service address, legal form and applicable governing law, details of any overseas public register which is entered on and any registration number. The overseas entity will also need to deliver one of the following three statements about its registrable beneficial owners and the required information for that statement:

	Statement	Required Information
Statement 1	a. The entity has identified one or more registrable beneficial owners and that it has no reasonable cause to believe there are others; and b. The entity is able to provide the required information about each registrable beneficial owner it has identified.	The required information about each registrable beneficial owner of the entity.
Statement 2	The entity has no reasonably cause to believe that it has any registrable beneficial owners.	The required information about each managing officer of the entity
Statement 3	a. the entity has reasonable cause to believe that there is at least one registrable beneficial owner that it has not identified; or b. the entity is not able to provide the required information about one or more the registrable beneficial owners it has identified; or c. paragraphs (a) and (b) both apply.	the required information about each managing officer of the entity. the required information about each registrable beneficial owner of the entity that has been identified (or as much as has been obtained)

It is understood that where an application for registration as an overseas entity discloses that a registrable beneficial owner is a trustee, it must also include a statement as to whether the entity has any reasonable cause to believe that there is required information about the trust that it had not been able to obtain (together with the required information about the trust itself).

Information required in relation to every registrable beneficial owner if statement 1 or 3 apply

Individuals	Governments & Public Authorities	Other entities
Name, Date of Birth and Nationality	Name	Name
Usual residential address	Principal Office	Registered or principal office
A service address	A service address	A service address
The date on which the individual became a registrable beneficial owner in relation to the overseas entity.	It's legal form and the law by which it is governed and the date on which it became aregistrable "beneficial owner".	The legal form of the entity and the law by which it is governed, the date on which it became aregistrable "beneficial owner" and any public register in which it is entered and any registered number in that register.
An explanation as to why the individual qualifies as a “beneficial owner”.	An explanation as to why the entity qualifies as a “beneficial owner".	Any public register in which it is registered and any registered number in that register.
Whether the individual is a trustee.	where the entity is a designated person (within the meaning of section 9(2) of the sanctions and anti-money laundering act 2018).	Where the entity is a trustee.
Where the individual is a designated person (within the meaning of section 9(2) of the sanctions and anti-money laundering act 2018) where that information is publicly available.	Whether the entity is a designated person (within the meaning of section 9(2) of the Sanctions and Anti-Money Laundering Act 2018) where that information is publicly available.	Whether the entity is a designated person (within the meaning of section 9(2) of the sanctions and anti-money laundering act 2018) where that information is publicly available.

Where an application for registration as an overseas entity discloses that a registrable beneficial owner is a trustee it must also include information about the trust such as the name or, if it does not have a name, a description of the trust, the date of the trusts creation and the details of the settlor, grantor, beneficiaries and other interested persons (name, date of birth, nationality, usual residential address, service address for individual, date of becoming registrable beneficial owner in that capacity).

The following information is required in relation to the managing officers of an overseas entity if statement 2 or statement 3 applies:

Individuals	Non-individuals
Name, Date of Birth and Nationality	Name
Any former name (unless changed before the age of 16 or more than 20 years previously).	Registered or principal office
Usual residential address	A service address
A service address	The legal form of the entity and the law by which it is governed
Business occupation	Any public register in which it is registered and any registration number
A description of the officers role	A description of the officers role; and the name and contact details of any individual who may be contacted about the magaing officer.

What are the deadlines to register with Companies House?

There is a short transition period of six months from the commencement date under the Act (which has not yet been triggered as at 23 June 2022) for overseas entities who already own UK property to submit their registration to Companies House.
You will see that the commencement date is currently unknown but the government has said it is committed to rapid implementation so it should be expected shortly.
Where an overseas entity has made relevant disposals of land since 28 February 2022 it must provide information about the overseas entities beneficial ownership as they were immediately prior to the disposal.
An overseas entity will need to deal with the creation of the register and supply of the supporting documentation before any land purchased can be formally registered and it is expected that the Land Registry will have a requirement for evidence of the existence of the register when any application is made to them.

How can we help?

The intent of the government is to make it difficult for any individual to invest funds that have been generated through dubious activities. It is not intended to deter genuine overseas entities from buying, selling and otherwise dealing in UK property.

Nevertheless, the requirements will prove burdensome to many. It is therefore important that any overseas entity that has previously dealt with or intends to deal with the purchase, sale or other dispositions or dealings with land in England and Wales (or Scotland) should be made fully aware of their obligations since the penalties are significant and could fetter an overseas entities ability to deal with land in the future.

We are committed to assisting overseas entities whether already existing clients or upon new instructions to comply with their legal obligation of transparency. However, the information evidence required will need to go considerably beyond the extent of due diligence currently required for most new clients.
Our costs for assisting/dealing with the register of overseas entity will depend upon the complexity of the ownership of the overseas entity and the evidence required and will be discussed on a bespoke one to one basis. if you wish us to deal with annual renewal of the register then an annual retainer will be agreed payable not less than two years in advance.