Explaining The Companies House Register of Overseas Entities

In March 2022, the Economic Crime (Transparency and Enforcement) Bill received royal assent, paving the way for the launch of the new Companies House Register of Overseas Entities on 1^st August 2022. In this article, we will explain why the Companies House Register of Overseas Entities has been introduced, who it affects, and the information they will need to provide.

What is the Register of overseas entities?

The Register of overseas entities (the Register) was included as a key part of the Economic Crime (Transparency and Enforcement) Act 2022 (the Act). The Register contains details on the beneficial owners of overseas entities that own land in the UK. The idea is that by shining a light on the true beneficial owners of UK land, organised criminals will be deterred from investing and hiding illicit funds in this country.

The Act states, “The Register has been established to increase transparency in the ownership of overseas entities that own UK land. Organised crime has previously used the anonymity of opaque corporate structures to invest in UK land and remain largely invisible. Those who own and control such entities must now be identified. This will help to expose those engaging in criminal activity and allow the appropriate action to be taken while making sure that legitimate businesses continue to see the UK as a great place in which to invest”. The result of the introduction of the Register is that overseas entities that own land or wish to purchase land in the UK must register with the Registrar of Companies for England and Wales (Companies House). The registration process requires overseas entities to disclose any beneficial owner(s) and managing officer(s) on the Register, and this must be updated on an annual basis.

Who are the beneficial owners of an overseas entity?

Part 1 of Schedule 2 to the Act states that “overseas entities” refers to legal entities governed by the law of a country or territory outside the United Kingdom; this can include:

• Individuals;
• Governments and public authorities, or;
• Other legal entities, including body corporates

An entity is a “beneficial owner” if they:

• Hold (directly or indirectly) own over 25% of the shares in an overseas entity
• Hold, directly or indirectly own over 25% of the voting rights in an overseas entity
• Hold the right, directly or indirectly, to appoint or remove a majority of the board of directors of an overseas entity
• Have the legal right to exercise, or actually exercises, significant influence or control over an overseas entity
• Are trustees of a trust, members of a partnership, unincorporated association or other entity that meets one or more of the conditions above
• Are a person with the right to exercise, or actually exercises, significant influence or control over the activities of that trust or entity.

It is important to note, however, that just because an entity is a beneficial owner, it may not be required to register.

Who is exempt from registration with the Register of overseas entities?

According to Part 4 of Schedule 2 of the Act, individuals and legal entities are exempt from the requirement to register with the Register of overseas entities if:

• they do not hold any interest in the overseas entity other than through one or more legal entities
• they are a beneficial owner of every legal entity through which the person holds such an interest
• they indirectly hold any shares or rights in the overseas entity through a beneficial owner of the overseas entity
• at least one of the legal entities through which these shares or rights are held is a beneficial owner of the overseas entity.

If you are unsure if you need to register with Companies House as an overseas entity, it is advisable to speak to a specialist in statutory company registration who will be able to confirm this for you.

When do I need to register with the Register of overseas entities?

Companies House have implemented a six-month transition period starting on 1^st August 2022 and ending on 28^th February 2022. The rules state that overseas entities that currently own a “qualifying estate” in England and Wales from 1^st January 1999 and Scotland from 8^th December 2014 must register by 28^th February 2022. A qualifying estate is a “freehold estate in land or a leasehold estate in land granted for a term of more than seven years”.

The rules also state, “Where an overseas entity in scope makes an application for registration on or before 31^st January 2023 (the last day of the transitional period), it must include in its application whether or not it has made a relevant disposition of land in England and Wales or Scotland since 28th February 2022”. A “relevant disposition of land” is:

• the transfer of a registered estate
• the grant of a term of more than seven years from the date of the grant, or
• the grant of a legal charge

If an overseas entity has made a relevant disposition of land after 28^th February 2022, they must include in the registration application:

• information relevant to the disposition – i.e. the date of the disposition in England and Wales or the delivery of deed in Scotland, the registered title number of the land, and
• information relevant to the state of affairs immediately prior to the disposition, and
• a written statement that this information has been included in the application

What information must be registered on the Register of overseas entities?

The information you need to provide on the Register of overseas entities application form depends on the type of entity, as follows:

1) Information on the overseas entity:

• name;
• country of incorporation or formation;
• registered or principal office;
• a service address;
• an 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.

2) Information on the beneficial owner if they are an individual:

• name, date of birth and nationality;
• residential address;
• service address;
• the date on which the individual became a registrable beneficial owner
• whether the person has ownership of shares, voting rights, the right to appoint or remove directors, or is a member of a trust or partnership
• whether the individual meets the above as a trustee;
• whether the individual is a designated person within the meaning of section 9(2) of the Sanctions and Anti-Money Laundering Act 2018

3) Information on the beneficial owner if they are a government or public authority

• name;
• principal office;
• service address;
• legal form and the law by which it is governed;
• the date on which the entity became a registrable beneficial owner
• whether the person has ownership of shares, voting rights, the right to appoint or remove directors, or is a member of a trust or partnership
• whether the entity is a designated person within the meaning of section 9(2) of the Sanctions and Anti-Money Laundering Act 2018

How do I register with the Register of Overseas Entities?

The process of declaring beneficial owners of relevant overseas entities is completed online on the Companies House website. Applicants will first need to complete the Companies House login registration process before they can complete their application for the Register of Overseas Entities. Once completed and submitted, Companies House will allocate an Overseas Entity ID (OE ID).

From 5^th September 2022, all overseas entities that do not own a qualifying estate will require an OE ID in order to register the acquisition of a qualifying estate on the Register of Overseas Entities.

Overseas entities who already own a qualifying estate are legally required to have an OE ID by 31^st January at the latest 2023, or else they risk criminal penalties.

What happens if I do not register with the Register of Overseas Entities?

The rules state that it is an offence not to register with the Register of Overseas Entities within the required timescale; “If an overseas entity which is required to register as an overseas entity fails to do so and cannot demonstrate a pending application for registration, the entity and every officer of the entity commits an offence. A person found guilty of an offence may be liable to a fine, imprisonment or both”.

Final words

Following the launch of the Register of Overseas Entities and given the transition period for registration, we recommend that overseas entities with an interest in UK land should review their portfolios to verify if they need to register with Companies House. We advise nominating or appointing a “relevant person” to handle this registration process and to update this on an annual basis. If you are unsure whether you need to register your overseas entity with Companies House or how to do this, speak to a specialist in this area who can guide you through the process you need to follow.

As a prominent professional business service provider in the UK, Uniwide Formations can handle all of your limited company or LLP registration and formation matters. We will create your company formation documents and we will make sure you know what you need to report and file with Companies House.