There has been a plethora of recent articles about the Economic Crime (Transparency and Enforcement) Act 2022 (the "ECA") and its provisions which deal with the register of overseas entities (the "Register"), but given that the Register is not yet in force and there is no suggestion as to when it will become effective, how concerned should lenders be?
Is it really worth spending time and effort considering the new regime when we don't yet have all the details as to how it will work in practice?
The simple answer to this is yes. We know that the Register is on the legal horizon and given the speed with which the ECA received Royal Assent (after it was essentially written off last year), we can expect that the setting up of the Register will be fairly high on the list of government priorities. On this assumption, it would be sensible for lenders to take certain steps now to ensure they are adequately protected when the Register takes effect.
So, what are the five main steps that lenders can take now, before the Register is in place?
- Get up-to-speed on the relevant provisions of the ECA. Understand what the Register is intended to achieve, to whom it will apply and how it will work. Read our client briefing note on how the Register will affect lenders and get in touch with your usual Forsters contact if you would like specific training or have any questions about the Register.
- Be mindful of your current clients and security portfolios already in place. Where an overseas entity acquired UK property before 1 January 1999, it will need to apply for registration once the Register opens. Such entities will have six months to apply for registration.
- Consider whether it would be sensible to inform any of your clients about their potential registration requirements. Although ensuring registration compliance is not a lender's responsibility, it may be prudent to encourage certain clients to begin collating the information that will be required for registration.
- Ensure that the documentation for facilities which are currently at the negotiation stage include the necessary comfort and protections that you, as a lender, will require when the Register takes effect. You will want to ensure that the overseas entity has a contractual obligation to apply for registration within the required time period, undertakes to complete the annual updates as required and sends evidence to you that they have so complied.
- Ensure that you periodically check to see whether a date has been announced upon which the Register will open. We will provide an update on this, but it is also likely to be published in the press and on the gov.uk website.
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.