The new register of overseas entities has been launched by the UK government as one of a number of measures under its Economic Crime (Transparency and Enforcement) Act 2022. The act seeks to prevent non-UK incorporated companies using UK land to hide illicit wealth. It grants powers to Companies House, who maintains the register, to challenge suspicious information.
Overseas entities must apply to be added to the register if they are a registered proprietor of a qualifying estate in land in England and Wales acquired on or after 1 January 1999, and provide details about those persons who exercise significant control over the entity.
The Department for Business, Energy & Industrial Strategy has published guidance on complying with the requirements of the new register. The guidance confirms that, as part of the registration process, overseas entities are required to disclose information about their beneficial owners and managing officers to Companies House. This information will be held on the register and the overseas entity must update this information annually.
‘Beneficial owners’, for the purposes of the act, are individuals, governments and public authorities, and other legal entities that are ‘subject to their own disclosure arrangements’, in each case which are not exempt and which meet at least one of the following conditions:
• They hold, directly or indirectly, more than 25% of either the shares or the voting rights in an overseas entity;
• They hold the right, directly or indirectly, to appoint or remove a majority of the board of directors of an overseas entity;
• They have the right to exercise significant influence or control over an overseas entity;
• They are trustees of a trust, members of a partnership, unincorporated association or other entity that fulfil one or more of the conditions above; or
• They are a person who has the right to exercise, or actually exercises, significant influence or control over the activities of that trust or entity.
A beneficial owner for the purposes of the Act is exempt from being registered on the register if:
• They do not hold any interest in the overseas entity other than through one or more legal entities;
• They are a beneficial owner of every legal entity through which the person holds such an interest;
• They indirectly hold any shares or rights in the overseas entity through a beneficial owner of the overseas entity that is subject to its own disclosure requirements; and
• At least one of the legal entities through which these shares or rights are held is a beneficial owner of the overseas entity and is subject to its own disclosure requirements.
• Overseas entities wishing to buy, sell or transfer property or land must register with Companies House.
• Overseas entities that already own land in the UK must register their beneficial owners or managing officers by 31 January 2023.
• Overseas entities must arrange verification checks by a UK-regulated agent to be completed on their beneficial owners and managing officers before registering a property.
• Overseas entities that have disposed of property after 28 February 2022 (after the announcement of legislation to create the register of overseas entities) must provide a statement to Companies House registering the details of the disposal.
Click here for a copy of the UK government press release for the register of overseas entities.
Click here for a copy of the Companies House guidance note for the register of overseas entities.
Click here for a copy of the Economic Crime (Transparency and Enforcement) Act 2022.
Click here for a copy of the BEIS guidance.
This article was produced in association with White & Case UK’s Public Company Advisory team. Read their original alert here.