From 1 August 2022, overseas entities that own or are planning to buy, sell or transfer property or land in the United Kingdom will be required to register on the Register of Overseas Entities (‘the Register’) administered by the UK Companies House.
A failure to comply with these obligations is a criminal offence and can result in
- fines of up to £500 for each day that the overseas entity is not registered, or
- a prison sentence of up to 5 years for the managing officer of the overseas entity.
There are additional civil penalties against the overseas entity, including restrictions on any dealings with the land or property (including restrictions on sale or leasing of the property).
The Register is designed to prevent criminal activity (such as money laundering) by providing transparent records of property ownership. In part, the legislation was also established to enforce economic sanctions against Russian interests in the aftermath of Russia’s invasion of Ukraine.
Who does the Register apply to?
The Register aims to provide publicly available information concerning the actual and beneficial owners of overseas entities that hold UK property.
An overseas entity can be any individual, company or similar legal entity that is governed by the law of a country or territory outside of the UK.
Overseas entities that already own land or property in the UK will also need to register on the Register if it acquired land or property on and from:
- 1 January 1999 (in England and Wales);
- 8 December 2014 (in Scotland); and
- 1 August 2022 (in Northern Ireland).
Further to the registration requirements (discussed below), if an overseas entity has disposed of land or property on or after 28 February 2022, the details of this disposal must also be provided.
There is a transitional period of 6 months (expiring on 31 January 2023), in which overseas entities that meet the requirements will need to register on the Register.
Given the serious criminal and civil penalties, it is critical that any Australian company or entity that owns land in the UK, or disposed of land after 28 February this year, complies with these new legislative requirements.
What does registration require?
The overseas entity will need to provide basic details concerning the entity (including address, name of directors, shareholders etc.), as well as a statement regarding its beneficial owners.
A beneficial owner is an individual or other legal entity that meets one or more of the following conditions:
- holds (directly or indirectly) more than 25% of the shares or voting rights in an overseas entity;
- is able to (directly or indirectly) appoint or remove a majority of the board of directors of an overseas entity; or
- has the right to exercise, or actually exercise, significant influence or control over the overseas entity; and
- in the case of a trust, partnership or other entity that is not a legal person - if the trustee of a trust or member of a partnership or unincorporated association meets one of the above conditions, then any person who has significant control or influence over the trust or partnership will be the beneficial owner.
Once this information is added to the Register, the overseas entity will receive a registration number, which can then be used if the entity engages in further acquisition or disposal of property within the UK.
Ongoing obligations
There will be ongoing obligations for overseas entities to update the register annually. In the event that the overseas entity no longer holds property in the UK, then it can apply to be removed from the Register.
More information
- Read Companies House guidance on the Register of Overseas Entities.
- Read HM Land Registry’s guidance on the Register of Overseas Entities.
- Read Register of Scotland’s guidance on the Register of Overseas Entities.
If you have a query relating to any of the information in this article, or would like to discuss a matter of your own, please don’t hesitate to get in touch with our Business, Corporate & Commercial Group today.