On 15 March 2022 the Act was enacted by the UK Parliament to have effect in the United Kingdom. Some parts of the Act are not yet in force, and the supporting regulation has not been published.
The purpose of this Act is to:
- Create a publicly accessible register containing information in relation to the overseas entity who own property in the UK as well as information about their beneficial owners.
- Make provision to compel overseas entities to register if they own land in England and Wales.
The register will be held by the Registrar of Companies (Companies House) for England and Wales.
These new measures are intended to increase transparency and the anti-corruption measures are their to aid in effective enforcement.
Where an overseas entity has made relevant disposals of land since 28 February 2022, it must provide information about the entity’s beneficial ownership immediately before the disposal.
Overseas entities who are not registered will not be able to make certain dispositions of their UK property (including sales, mortgages and leases of more than 7 years) because these dispositions will be unable to be registered at the Land Registry.
Furthermore, an overseas entity that is not currently registered, cannot be registered as the legal owner of the property at the Land Registry office. This will effectively prevent the entity from acquiring the new property.
The application process for registration
The overseas entity must submit an application to the Registrar of Companies (Companies House) and the application should contain:
- the statement and information listed in row 1, 2 or 3 of the table below, and, where applicable, the statement and information mentioned in the Act
- a statement that the entity has complied with the relevant section duty to take steps to identify registrable beneficial owners, etc,
- anything required by regulations to verify registrable beneficial owners and managing officers to be delivered to the registrar, and
- the name and contact details of an individual who may be contacted about the application.
A statement that the entity has no reasonable cause to believe that it has any registrable beneficial owners
Where an application includes information that the registrable beneficial owner is a trustee, the application must also include:
- the required information about the trust or so much of that information as the overseas entity has been able to obtain, and
- a statement as to whether the entity has any reasonable cause to believe that there is required information about the trust that it has not been able to obtain.
Once registered, the overseas entity has a further duty to update the information held on the register every 12 months.
The registered entity should submit an updated statement to the Registrar within 14 days following each update period where the update periods are:
- the period of 12 months beginning with the date of the overseas entity’s registration;
- each period of 12 months beginning with the day after the end of the previous update period.
If a registered overseas entity fails to comply with the updating duty under section 7, it will be deemed that the entity has committed an offence, and every officer of the entity who is in default.
The penalty on summary conviction is not exceeding £2,500.00
Proprietorship of relevant interest in land
An overseas entity is registered as the proprietor of a relevant interest in land if the entity:
- is registered in the register of title kept under the Land Registration Act 2002 as the proprietor of a qualifying estate, and
- became so registered in pursuance of an application made on or after 1 January 1999
- is entered on or after 8 December 2014, as proprietor in the proprietorship section of the title sheet for a plot of land that is registered in the Land Register of Scotland,
- in relation to a lease that was recorded in the General Register of Sasines or registered in the Land Register of Scotland before that date is, by virtue of an assignation of the lease registered in the Land Register of Scotland on or after that date, the tenant under the lease, or
- is the tenant under a lease that was registered in the Land Register of Scotland on or after that date, or
- is registered in the register kept under the Land Registration Act (Northern Ireland) as the owner of a qualifying estate, and
- became so registered on or after the day on which that Schedule came into force.
What Information is Required by the Registrar?
The following is required from an overseas entity:
- country of incorporation or formation
- registered or principal office
- service address
- email address
- the legal form of the entity and the law by which it is governed
- any public register in which it is entered and, if applicable, its registration number in that register
From registerable beneficial owner and managing officers:
- name, date of birth and nationality
- usual residential address
- a service address
- the date on which the individual became a registrable beneficial owner in relation to the overseas entity
- which of the conditions in paragraph 6 of Schedule 2 is met in relation to the registrable beneficial owner and a statement as to why that condition is met
- whether the individual meets that condition by virtue of being a trustee
- whether the individual is a designated person
- registered or principal office
- a service address;
- the legal form of the entity and the law by which it is governed;
- any public register in which it is entered and, if applicable, its registration number in that register;
- the date on which the entity became a registrable beneficial owner in relation to the overseas entity;
- which of the conditions in paragraph 6 of Schedule 2 is met in relation to the registrable beneficial owner and a statement as to why that condition is met;
- whether the entity meets that condition by virtue of being a trustee;
- whether the entity is a designated person (within the meaning of section 9(2)of the Sanctions and Anti-Money Laundering Act 2018), where that information is publicly available.
- the name of the trust or, if it does not have a name, a description by which it may be identified;
- the date on which the trust was created;
- in relation to each person who has at any time been a registrable beneficial owner in relation to the overseas entity by virtue of being a trustee of the trust—
- the person’s name,
- the date on which the person became a registrable beneficial owner in that capacity, and
- if relevant, the date on which the person ceased to be a registrable beneficial owner in that capacity;
- in relation to each beneficiary under the trust, the information that would be required under paragraph if the beneficiary were a registrable beneficial owner in relation to the overseas entity;
- in relation to each settlor or grantor, the information that would be required under paragraph if the settlor or grantor were a registrable beneficial owner in relation to the overseas entity;
- in relation to any interested person
- the information that would be required if the interested person were a registrable beneficial owner in relation to the overseas entity, and
- the date on which the person became an interested person.
Who is considered a beneficial owner?
A person (“X”) is a “beneficial owner” of an overseas entity or other legal entity(“Y”) if one or more of the following conditions are met.
Condition 1 – Ownership of shares
That X holds, directly or indirectly, more than 25% of the shares in Y.
Condition 2 – Voting rights
That X holds, directly or indirectly, more than 25% of the voting rights in Y.
Condition 3 – Right to appoint or remove directors
That X holds the right, directly or indirectly, to appoint or remove a majority of the board of directors of Y.
Condition 4 – Significant influence or control
That X has the right to exercise, or actually exercises, significant influence or control over Y.
Condition 5 – Trusts, partnerships, etc
- the trustees of a trust, or the members of a partnership, unincorporated association or other entity, that is not a legal person under the law by which it is governed meet any of the conditions specified above (in their capacity as such) in relation to Y, and
- X has the right to exercise, or actually exercises, significant influence or control over the activities of that trust or entity.
A transitional period will be in force for 6 months from the date that the legislation came into force.
Companies and clients should take reasonable steps identify any UK land that is held within their structures, either directly or indirectly by an overseas entity, as well as the beneficial owners of the land in order to accurately report on this.
During the transition period, it is encouraged that those who already hold property, wish to hold property, or wish to dispose of property in the UK are able to prepare and to submit an application for registration in a timely manner so as to avoid any penalties for non-compliance.
The first reporting date will be at the end of the 6-month period when the register will be in force.