The register of overseas entities managed by Companies House (the Register) is now live and accepting applications, but there is a short grace period until 5 September for the registration of land transactions. In this update we set out more detail as to the registration requirements and process and our thoughts as to what overseas entities should be doing now to ensure compliance.

Background

The English government has established the Register with the intention of increasing "transparency", to allow "law enforcement agencies to investigate suspicious wealth more effectively". Essentially, any overseas entity which owns or is to acquire UK property will need to register, providing details about the entity itself and its beneficial owners. HM Land Registry will enter restrictions against the title of such property so preventing the overseas entity from entering into various property-related transactions unless it is on the Register.

Further detail about the Register and the obligations arising can be found in our earlier note on the topic (see our article here). Since that note's publication, additional regulations have been published adding in extra layers of process.

Key Dates

The Register went live on Monday 1 August 2022, meaning that overseas entities can now apply to Companies House to be admitted to the Register.

The property-related provisions will however, only take effect on 5 September 2022. This grace period has been implemented to avoid property transactions being held up by the need to register. Its effect is that any overseas entity currently in the middle of a property-related transaction which completes before 5 September, will not need to register in order to complete and make the necessary entries at HM Land Registry.

However, any overseas entity which intends to complete the purchase of any UK property on or shortly after 5 September would be wise to apply to the Register now to ensure that the registration process does not delay completion. As from 5 September 2022, overseas entities will not be able to register a freehold interest or a lease exceeding seven years unless they are registered on the Register at the time the application is made.

Any overseas entity which held UK property on 1 August 2022 will need to apply to register in any event by 31 January 2023 (i.e. six months from the Register going live). Such application will also need to disclose details of the disposition of any UK property by that entity since 28 February 2022. This registration obligation applies to overseas entities which became registered as proprietor of the UK property pursuant to an application to the Land Registry on or after 1 January 1999.

UK-Regulated Agent

To register, an overseas entity will need to provide certain information about itself and its beneficial owners (or if there are no beneficial owners, its managing officers) to Companies House. Pursuant to regulations published earlier in the summer, such information must first be verified by a "UK-regulated agent". Registration will not be possible without this verification from a UK-regulated agent. The information must be verified not more than three months before the application to register is sent to Companies House.

Service providers such as accountancy firms and law firms are among those who may apply to become a UK-regulated agent but obviously, there are responsibilities, risks and potential liabilities which also come with the position. It is to be hoped that a publicly available list of such agents will become available in due course. The verification process is not exactly aligned with the requirements of anti-money
laundering regulations, so overseas entities may find they are required to provide more detailed information than is ordinarily required for transactions.

The UK-regulated agent can submit the registration application with the verification statement, or if the overseas company is making the application itself, the agent can provide the verification separately to Companies House by email within 14 days of the application being made.

Verification will also be required when the overseas company complies with its duty to update its entry on the Register each year.

Fee

There is a registration fee of £100 payable to Companies House.

Practical Steps

  • Overseas entities which: (a) currently hold UK property; or (b) intend to acquire UK property, should be collating the information required to register and submitting their registration applications to Companies House as soon as possible. We can assist you further with this.
  • Completion prior to 5 September 2022 of an acquisition or disposal of a freehold interest or of a lease for a term exceeding seven years from the date of grant will not be affected by the Register but the purchaser should register as soon as possible.
  • Completion on or after 5 September 2022 of an acquisition or disposal of a freehold interest or of a lease for a term exceeding seven years from the date of grant will not be possible unless the overseas entity is already registered.

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.