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UK Real Property Beneficial Ownership Register Progresses In England And Wales – Directors and Officers



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On 1 August, a new Register of Overseas Entities under the
Economic Crime (Transparency and Enforcement) Act 2022 came into
force, requiring overseas entities that currently own land in the
United Kingdom to register verified information relating to their
beneficial owners or managing officers at Companies House by 31
January 2023. While the Act affects the UK, this note sets out the
position in England and Wales.

Once registered, Companies House will issue the overseas entity
with an “overseas entity ID number,” which will be used
to register with the Land Registry. Overseas entities looking to
buy, sell, transfer or lease land, or create a charge against land
in the UK will need to register with Companies House. Otherwise,
the disposition cannot be registered at the Land Registry. Any
person looking to acquire property from an overseas entity will
need to check that the overseas entity has been registered and
listed in the Register.

After registering, the name of the overseas entity and its
beneficial owners will be publicly available. The amendment
provisions to the Land Registration Act 2002 (which, in effect,
prevent the Land Registry from registering an overseas entity as a
proprietor unless it has an overseas entity ID) come into force on
5 September. From 5 September 2022, overseas entities will not be
able to register their asset with HM Land Registry if they have not
undergone the verification process with Companies House. Failing to
comply could result in a criminal penalty for the entity and its
officers (subject to certain exemptions), punishable by a
£2,500 per day fine or a five-year prison sentence. If there
are no beneficial owners, or no beneficial owners have been
identified, information about the overseas entity’s managing
officers will need to be provided. Managing officers include any
director, manager or company secretary of the overseas entity.

When must an overseas entity register with Companies
House?

All legal forms of overseas entities which own freehold land and
leasehold of more than 7 years:

  • in England and Wales on or after 1 January 1999;

  • in Scotland on or after 8 December 2014;

will have until 31 January 2023 to submit the required details
to Companies House. This does not include trusts as they do not
have a separate legal identity but details of the trustee would
still need to be included if the trust is the beneficial owner of
the asset. Information relating to beneficial owners (if any)
and/or managing officers, similar to information provided for the
People with Significant Control (PSC) register, will need to be
disclosed as part of the registration process and updated
annually.

The overseas entity will need to serve an information notice to
each beneficial owner requiring them to state whether or not they
are a beneficial owner and to confirm, correct or supplement the
information about them in the notice. The overseas entity must
perform this before applying to register at Companies House. The
beneficial owners will have one month to respond upon receiving the
notice from the overseas company. Failing to comply with this
requirement is punishable by a fine of up to £2,500 per day
or up to five years in prison.

Who can verify information for the beneficial owners or
managing officers?

A “relevant person” (known as a “supervised
agent” because they are supervised under Money Laundering
Regulations) such as an independent lawyer (i.e., not in-house) or
accountant would need to verify the information before the overseas
entity can register with Companies House. This relevant person
would first need to register with Companies House to obtain an
agency code before they can verify the relevant information
relating to the beneficial owners or officers. Certain exceptions
apply that prohibit the relevant person from being a family member
or known close associate of an individual beneficial owner.
Overseas entities should bear in mind that the verification process
could potentially be complicated and time-consuming under this new
requirement thus is advisable to commence the process as soon as
possible.

Who is classified as a beneficial owner?

A person is a “registrable beneficial owner” if they
are a beneficial owner and they are not exempt from registration on
the Register, which is similar to the PSC regime. A person is
considered a “beneficial owner” of an overseas entity if
they:

  • hold, directly or indirectly, more than 25 percent of the
    voting rights in an overseas entity;

  • have the right to appoint or remove a majority of the
    directors; or

  • have the right to exercise, or actually exercises, significant
    influence or control over an overseas entity.

Legal entities that are beneficial owners, not exempt, and
“subject to their own disclosure requirements” are
registrable beneficial owners, which is the case, for example, when
they:

  • have voting shares admitted to trading on a regulated
    market;

  • are listed on the Register; or

  • are governed by the law of a country outside the UK and provide
    trust services if the provision of trust services is regulated in
    that country by a supervisory authority.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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