From 1 August 2022, the UK government will introduce the register of overseas entities. Law firms acting on behalf of clients in particular lawyers dealing with property transactions involving overseas entities will need to consider whether they are impacted.
The register will be maintained by Companies House and will need to keep that register up to date. Legislations relating to the registration of dealings with land to or by an overseas entity in the UK's land registers will come into force on 5 September 2022.
If the overseas entity already owns the property or acquired the property after 1 January 1999 in England and Wales, it must submit their application to the register of entities by February 2023. If the property is not registered by that time, the overseas entity cannot transact on that property until it is registered.
What should lawyers acting for overseas entities do?
You should encourage your clients to:
- collect the information required by Companies House in relation to the beneficial owners of the entities.
- decide which third party they'll use to provide the required verification statement to Companies House and obtain their agreement to do this.
- obtain the required confirmations from the beneficial owners
Who can verify the beneficial owners before entering entities onto the register?
The new Register will require overseas entities to declare their beneficial owners and/or managing officers. Companies House has now confirmed that before an overseas entity registers its beneficial owners or managing officers on the new Register, a UK-supervised 'relevant person' will need to verify the required information about them.
The relevant person includes but not limited to:
- credit institutions
- financial institutions
- auditors, insolvency practitioners, external accountants and tax advisers
- independent legal professionals
- trust or company service providers
- estate agents and letting agents
What happens if entities don't comply?
Failure to comply is potentially a criminal offence both for the entity and its officers, (subject to mitigation and transitional provisions) punishable by a fine and/or imprisonment.
For more detail on exactly what the Act means for overseas entities, contact our team who can help with verifications of your beneficial owners.