Time is running short – new register of overseas entities
The Economic Crime (Transparency and Enforcement) Act 2022 (ECTEA 2022) came into force on 15 March 2022 and introduced a new Register of Overseas Entities, applying to all overseas companies including corporate bodies and partnerships that own a freehold interest in UK land or a leasehold interest granted for a term of more than seven years.
As the Act applies retrospectively to Overseas Entities who have acquired property since January 1999 in England and Wales, the registrable beneficial owners or managing officers must be identified and the Overseas Entity registered at Companies House before the transitional period ends on 31 January 2023.
Failing to comply will give rise to criminal offences and sanctions under the Act. The Overseas Entity will also not be able to register dispositions at the Land Registry (unless they are exempt) until they have successfully registered.
How to register and who applies?
Simply put, a UK Supervised Agent is required to verify the Overseas Entity’s information in accordance with the terms of the Act and complete and submit the online form found on the Companies House website with the relevant fee payable. Upon successful registration, the organisation will be allocated an overseas entity ID number which is to be used for Land Registry applications.
As the idea behind the Act is to register the Overseas Entity in order to identify the ultimate beneficial owners, in the case where there are subsidiaries, registering the holding or parent company should prevent the Land Registry from imposing restrictions on the title.
Does it impact the registration of legal charges?
As the transitional period is coming to an end on 31 January 2023, lenders should ensure that overseas borrowers are on the Companies House Register.
If the Overseas Entity became the registered proprietor of UK property prior to 1 August 2022, a legal charge can be registered at the Land Registry without the Overseas Entity being on the register.
However, if the Overseas Entity became the registered proprietor of UK property after 1 August 2022, they would need to be on the Companies House Register and have a valid overseas entity ID number in order to register a legal charge, otherwise the Land Registry will refuse to register the title to the property which will invariably affect the registration of the legal charge.
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