Understanding the new register of overseas entities owning UK land
The Economic Crime (Transparency and Enforcement Act) 2022 (The Act) received Royal Assent on 15 March 2022.
This Act includes provisions for those who already own or wish to own land in the UK; the Overseas Entities Register.
This register was initially announced in March 2016 shortly before the Prime Minister at the time David Cameron hosted an international anti-corruption summit in London in May 2016.
The proposed new beneficial ownership register will be the third register of its kind in the UK alongside the existing People with Significant Control (PSC) Register and the Trust Register highlighting the necessity for directors and trustees to be up to date with UK governance.
The creation of the register is intended to aid reaching the objective of Part 1 of The Act: to prevent and combat the use of land in the UK by overseas entities as a means to launder money or invest illicit funds and to increase transparency and public trust in overseas entities engaged in land ownership in the UK. As a result in response to the Russian invasion of Ukraine the UK government is set to fast-track the Act.
Since the introduction of the PSC Register in June 2016 UK entities have been required to provide information of their ultimate owners and controllers that lie above. But with the introduction of the Act and more specifically the 'Register of Overseas Entities' overseas entities will now be required to divulge similar information should they own UK property increasing transparency in respect to money being utilised within the UK.
What needs to be done?
An 'overseas entity' is defined as a legal entity which is incorporated outside of the UK. This includes an entity being constituted under and governed by a law other than UK law (entities formed in the Channel Islands will also be classed as 'overseas entities').
The 'Register' encompasses those overseas entities that have acquired property in the UK after 1 January 1999 and as such applicants will be required to provide fundamental details about the entity and include one of these three statements:
a) The entity has identified one or more registerable 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 registerable beneficial owner it has identified.
The entity has no reasonable cause to believe that it has any registerable beneficial owners
a) The entity has reasonable cause to believe that there is at least one registerable beneficial owner that it has not identified; or
b) The entity is not able to provide the required information about one or more of the registerable beneficial owners it has identified;
c) Both a) and b) apply as one
Where an application for registration as an overseas entity discloses that a registerable 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 has not been able to obtain (together with the required information about the trust).
In addition during the six-month transition period an overseas entity must state whether or not it has made any relevant disposals of land since 28 February 2022.
There will be further detail required to be submitted based on each individual registerable beneficial owner should statement 1 or 3 apply.
If you wish to discuss the Overseas Entities Register in further detail please contact Joshua.
Please note that this article is intended to provide a general overview of the matters to which it relates. It is not intended as professional advice and should not be relied upon as such. Any engagement in respect of our professional services is subject to our standard terms and conditions of business and the provision of all necessary due diligence. © Praxis 2023