The Register of Overseas Entities: what does this mean to you and your business?

Wednesday 16th March 2022

The UK Government, through Companies House, introduced a ‘Register of Overseas Entities’ through the enactment of the Economic Crime (Transparency and Enforcement) Act 2022. The Act was fast-tracked through Parliament and received Royal Assent on 15 March 2022. The aim of the Act is to ensure the clamping down on foreign criminals from laundering their money in the UK.

What is the Register of Overseas Entities?

Companies House will establish a new register, which will be accessible to the public. It will require foreign owners of UK property to reveal the identities of their true beneficial owners.

What entities will be impacted?

The Act will affect overseas entities, those governed by a law outside the UK, who own UK property, to identify and name its beneficial owners. Beneficial owners are those with 25% or more shares or voting rights in the company. Those identified will be required to register with Companies House. Non-UK incorporated companies, LLPs, foreign foundations and non-UK partnerships will be caught.

What property will be impacted?

The requirement to register will apply retrospectively for UK property bought in an overseas entity’s name since 1 January 1999 (December 2014 for Scottish properties). Both freehold estates in land and leasehold estates granted for more than seven years from the date of grant will be caught.

On acquisition of UK property, if an overseas entity does not register its beneficial owners with Companies House then it will not be registered as the legal owner of that property unless an exemption applies. Likewise, no disposition (e.g. transfer or sale) of UK property will be validly registered unless the disposition is exempt.

What are the consequences of failing to register?

Overseas entities who own UK property will have six months from when the Register comes into force to become registered. After this, the entity and its officers will be considered to have committed an offence.

Breaches for failing to register can have consequences for both the overseas entity and any officer associated. These can be £2,500 daily fines up to 5 years prison for the most serious breaches.

There are some exemptions from registering. For example for reasons of national security, interests of the economic wellbeing of UK or preventing or detecting serious crime.

Expansion of Unexplained Wealth Orders

The Act also expands the scope of Unexplained Wealth Orders to enable them to be sought against properties held in trust, as opposed to only against individuals as is the current position. This is intended to have a significant dissuasive effect on people whose assets appear disproportionate to their income. It strengthens law enforcement authorities’ powers to take more effective against kleptocrats, corrupt elites and serious and organised criminals who launder their funds in the UK.

If you have any questions about how the Act may impact you, please contact Gordons Regulatory experts.