CORPORATE TRANSACTIONS & COMPLIANCE BLOG

New Requirements for Overseas Entities in the UK

By: Pushkala Sivaramakrishnan, COGENCY GLOBAL on Wed, Jan 18, 2023

 

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What this is:  A new Register of Entities mandates that foreign companies that possess land or property in the UK list their managing executives and/or beneficial owners.

What this means:  Those who do not comply may face penalties, such as limitations on their ability to purchase, sell, transfer, lease, or charge their land or other property in the UK.


In order to provide greater transparency and to help prevent money laundering, the UK Government has introduced a Register of Entities through the Economic Crime (Transparency and Enforcement) Act 2022, that came into force on August 1, 2022. The legislation aims to avoid the anonymity of opaque corporate structures that invest in UK land and remain largely invisible. This is accomplished by having overseas entities register their ownership information in the Register of Entities and obtain an entity ID prior to transacting in properties. All overseas entities that own UK property on the effective date are required to register their beneficial ownership information (in addition to any new acquisition of property occurring after the effective date.)

Effective Date

This new law is effective January 31, 2023 and will apply to property transactions as follows, having specific retroactive requirements:

An overseas entity is within the scope of the Register if it owns land purchased:

  1. in England and Wales on or after January 1, 1999;
  2. in Scotland on or after December 8, 2014; and
  3. in Northern Ireland on or after August 1, 2022. 

Beneficial Owners

The Act sets out the following as potential beneficial owners of the company: 

  1. Individuals;
  2. Governments and public authorities, or;
  3. Other legal entities (e.g. a body corporate), where they are subject to their own disclosure arrangements

if they own, directly or indirectly, over 25% shares or voting rights or exercise significant control or influence over the Overseas Entities.

Identification, Verification and Registration of Beneficial Owners

The Overseas Entities are required to identify their beneficial owners, have their identities checked by the Relevant Persons and register the same with the Companies House. This information will be held on the Register and the overseas entity must update this information annually.

Relevant Persons authorized to verify beneficial owners’ identity as per the Regulations are (i) Conveyancers (ii) credit and financial institutions (iii) auditors/ insolvency practitioners (iv) legal professionals (v) trust and company service providers (vi) estate agents and letting agents etc.

Once the identity is verified, the relevant persons will be required to furnish a statement to the Companies House along with their agent assurance code and submit the same to the Companies House.

Thereafter, the Overseas Entity will be able to obtain an Entity ID for use in property transactions. 

You’ll need help with identification, verification and registration of beneficial owners. You need a service company that can:

  • Assist overseas entities in registering their branch in the UK
  • Act as the address for service of process for the Overseas Entity in England
  • Assist OEs intending to acquire/ dispose of UK property to identify registrable beneficial owners (partnership with a law firm)
  • Collect registrable beneficial ownership information from OEs and update the information annually.
  • Act as the ‘relevant person’ for verifying the identity of the ownership information provided by you (need to register and obtain an agent assurance code)
  • Conduct MLR and sanctions cheques
  • Registration with the Companies House and obtaining Entity ID for UK property acquisition
  • Act as the address for service of process for the Beneficial Owners in England (individuals and entities)

This content is provided for informational purposes only and should not be considered, or relied upon, as legal advice.

Topics: Registered Agent