The Economic Crime (Transparency and Enforcement) Act 2022, which establishes the Register of Overseas Entities, is now in force, and overseas entities holding United Kingdom (UK) properties must register by January 31, 2023.
The register, available since August 1, requires overseas entities to declare beneficial owners or managing officers. The primary responsibility to input the information in the register lies with the overseas entity. According to Companies House, there are 93,877 UK properties owned by 31,506 overseas entities in 213 countries.
Tuesday’s presentation was delivered by Nick Lindsay, founder and Director of Legal and Governance at Elementaland Tobias Latham, Elemental’s Director of Payment and Corporate Services, at the BVI Finance Breakfast Forum on Tuesday.
BVI Finance CEO and forum moderator Elise Donovan told participants that the BVI has been identified as a key stakeholder and pointed to estimates showing that about 11,700 BVI companies own more than 23,000 UK properties.
Mr. Latham informed the forum that overseas entities cannot buy, sell, transfer, or lease property or create a charge against a property in the UK unless they have registered with the UK’s Companies House.
Overseas entities which want to buy, sell or transfer property or land in the UK must register with Companies House; tell Companies House who their registrable beneficial owners or managing officers are; this information must be verified by a UK-regulated agent. Mr. Latham noted that the law has a retroactive feature, requiring companies that disposed of or sold land after February 28, 2022, and no longer own it, to tell Companies House about the disposal.
Currently, the register is a manual system where trusted information is imputed into a spreadsheet, a confirmation of verification is received via email; and there is no software filing or account payment.
Failure to register results in a daily fine of up to £2,500, a prison sentence of up to five years and restrictions imposed on buying, selling, transferring, leasing or charging property or land in the UK.
Trusts as owners of land
Mr. Lindsay discussed the special circumstances regarding trusts as owners of land.
“Where a trustee owns the land on behalf of a trust directly and not a special purpose vehicle,” Mr. Lindsay then said, “ only the trustee’s ownership needs to be considered.”
Also important to note, if the trustee is an individual or a UK company, then no registration is required in relation to the Register of Overseas Entities. Additionally, if the trustee is an overseas corporate entity, then the trustee will need to be registered as an overseas entity.
“In this case, the beneficial owners of the corporate trustee will need to be verified and registered; no information on the trust would need to be disclosed as the trust would not be a beneficial owner of an overseas entity.”
To watch the special Breakfast Forum on the UK Economic Crime (Transparency and Enforcement) Act 2022 and the Register of Overseas Entities, Click Here