Overseas entities must keep their registered property information up to date

The Economic Crime (Transparency and Enforcement) Act 2022 (“the 2022 Act”) introduced a requirement for overseas entities owning, or wishing to acquire or dispose of, certain property in the UK to be registered on a Register of Overseas Entities (“the Register”) at Companies House, and to provide information about their beneficial owners.

Are you an overseas entity?  An overseas entity is defined in the Act as a body corporate, partnership, or other legal person that is governed by the law of a country or territory outside the United Kingdom.

The 2022 Act amended the Land Registration Act 2002 so that an overseas entity will usually be required to be on the Register in order to make certain dispositions of a qualifying estate (that is, a freehold estate, or a leasehold estate granted for a term of more than seven years) or to be registered at HM Land Registry as the legal proprietor of a qualifying estate.

However, the 2022 Act also imposes a duty on registered overseas entities to update their information on the Register on an annual basis.   If an overseas entity fails to comply with this duty, it and every officer who is in default commits a criminal offence punishable by a fine.   Moreover, the overseas entity is treated as not being registered for purposes of the Land Registration Act 2002 until the failure is remedied by delivery of the required updated information.   This can have serious consequences.   For instance, if an overseas entity is in breach of its updating obligations and therefore not treated as a registered entity at the time of making certain dispositions of a qualifying estate, a criminal offence (punishable by a fine or imprisonment or both) is committed by the entity and every officer of it who is in default, and any such disposition cannot be registered.  Subsequently lodging the relevant annual filings with Companies House will not remedy the matter, as the overseas entity was treated as not registered at the time the disposition was made.   The disposition, as the law currently stands, will generally be permanently unregistrable.

The Register opened on 1 August 2022, and overseas entities owning qualifying estates were required to be registered by 31 January 2023, so many overseas entities will now be approaching the first anniversary of their registration.

The requisite information for an updating filing must be lodged with Companies House within 14 days after each update period (which will end on the day before the anniversary of the overseas entity’s registration).

Overseas entities should not assume that this will be a quick matter of filling in a form online.

Before providing updates to Companies House, an overseas entity must take reasonable steps to identify any registrable beneficial owners in relation to it, and obtain the required information about each registrable beneficial owner it identifies.

To comply with the obligation to identify and obtain information in relation to its beneficial owners, an overseas entity must give notice to anyone that it knows, or has reasonable cause to believe, is a registrable beneficial owner, requiring them to provide certain information, and requiring the recipient to comply within one month of the day on which the notice is given.   Time must therefore be allowed for this process to take place before the update needs to be filed.

Moreover, where any of the information required to be filed at Companies House is changing, verification checks (which remain valid for three months) must be completed on that information by an appropriate person having an “agent assurance code” from Companies House.   Time must also be allowed for these verifications checks to take place, where any information is being changed.

Any overseas entity on the Register ought therefore to give early thought to complying with looming deadlines for filing its update.   Not only could failure to comply with its duties by the due date cause complications in property transactions, but Companies House will enter a “black mark” on the Register against those overseas entities in default.

This article was written by Jonathan Griffiths. If you have any questions or concerns over compliance with the law regarding overseas entities, please do get in touch with us.

All the thoughts and commentary that HLaw publishes on this website, including those set out above, are subject to the terms and conditions of use of this website. This article is intended to give general guidance only, and should not be relied on as a substitute for legal advice in any particular matter or transaction.  While accurate when written, it will in time cease to be a correct reflection of the law: for instance, the Economic Crime and Corporate Transparency Bill currently making its way through Parliament is likely to amend the 2022 Act.

Humphreys Law