1 June 2022
Beneficial owners of non-UK companies that own UK land will be included on a publicly accessible register under provisions included in the Economic Crime (Transparency and Enforcement) Act, which was passed on 15 March 2022.
Here we discuss what this means for landowners and the impact on transactions in UK property.
Non-UK incorporated companies and other legal persons governed by the law of a country outside the UK (such as foundations and non-UK LLPs) ("overseas entities") will have to register with UK Companies House on the "register of overseas entities", and provide information on their beneficial owners, if they own UK land (which has been acquired since 1 January 1999), or want to acquire an interest in UK land.
This will apply to freehold interests in UK land and leasehold interests granted for more than seven years from the date of grant.
The persons who will appear on the register are those that are considered to have "control" over the overseas entity.
The beneficial owners are, broadly, those individuals or legal entities that:
If an overseas entity holds a UK property as nominee or bare trustee for another person, the persons that will appear on the register are those who are treated as the "beneficial owners" of the overseas entity in line with the rules explained above (ie have control over the overseas entity, such as a person holding more than 25% of the shares).
This is not necessarily the same persons for whom the overseas entity holds the UK property as a nominee (although it could be) and so not the persons who have the beneficial interest in the land.
However, nominee arrangements and bare trusts fall within the scope of the UK trust register (the "TRS") and non-UK nominee companies that are registered as the legal owners of an interest in UK land, on or after 6 October 2020, may also have to register the nominee arrangement on the TRS.
Non-UK trusts that own UK land directly are not required to register as an overseas entity (as the trust does not have a separate legal personality) – but a non-UK trust that owns UK land directly must keep a register of beneficial owners and register the trust with HMRC on the TRS.
However, where the trustee of a trust that holds UK land directly is a non-UK corporate trustee, that non-UK corporate trustee will fall within the definition of an overseas entity and will need to register on the register of overseas entities.
Where the beneficial owners of an overseas entity that holds an interest in UK land include the trustees of a trust, information on that trust and its trustees, settlor, beneficiaries and other persons with certain powers over the trust may need to be provided to Companies House. This additional information in relation to the trust will not be disclosed to the public but will be available to HMRC.
At the time of publishing this article, the UK government has not yet issued the regulations which will bring the rules into force.
Overseas entities that hold UK land that was acquired after 31 December 1998 will have six months from the date on which the rules come into force to register.
An overseas entity that currently holds UK land but disposes of it before the deadline for registration will have to provide Companies House with details of the disposal and of its beneficial owners immediately before the disposal.
These transitional rules apply to any disposal made on or after 28 February 2022.
An overseas entity that fails to register with Companies House and provide the required information on its beneficial owners will not be registered as the legal owner and will, therefore, be unable to sell or lease the land, or create a charge over it (other than in limited circumstances).
The overseas entity and its officers will also be liable to civil and criminal penalties for failing to register, such as:
The Land Registry is obliged to enter a restriction on the title to any UK land where it is satisfied the registered proprietor is an overseas entity registered on or after 1 January 1999.
The restriction will broadly prohibit the registration of any:
An overseas entity purchasing UK land will be unable to be registered as proprietor of that land without demonstrating to the Land Registry that they have complied with the registration requirements (by producing an overseas entity ID).
Yes. Registered overseas entities will be given an overseas entity ID and will be required to update the information provided to Companies House annually (or confirm that the information previously provided is up to date).
As with the PSC register currently maintained by Companies House in respect of UK companies, members of the public will be able to inspect the register of overseas entities without charge and require a copy of some or all of the register.
If you have any questions on the register of overseas entities regime and how it will affect you, please get in touch.