Background
Overseas entities holding " qualifying estates" (freehold, or leasehold for a term of more than 7 years) in the UK must now be registered on the overseas entities register at Companies House.
Under the Economic Crime (Transparency and Enforcement) Act 2022, which created the overseas entities register, each overseas entity is, on registration, allocated a unique overseas entity identity number (OE ID) which needs to be available for Land Registry transactions involving the registration of certain interests. Additionally, each overseas entity holding a qualifying estate since 1st January 1999 will need to have that OE ID.
The Act also requires overseas entities that have disposed of qualifying estates since 28 February 2022 to supply certain information to Companies House before 31st January 2023.
We set out full details of the interests that trigger such registration and what information needs to be supplied to Companies House as well as details of the dispositions for which the Land Registry requires OE ID in our article published last year see here.
Transitional Period
At the time the Act was passed, a transitional 6 month period was created to give those overseas entities which have held qualifying estates since 1st January 1999 in England and Wales (8th December 2014 in Scotland and 1 August 2022 in N Ireland) time to apply for registration on the overseas register. The transitional period expires 31st January 2023. Penalties for non-registration include fines and criminal liability (not just for the company itself but also certain managing officers).
It appears that the legislature underestimated the length of time it would take for companies to act. Companies House has published some blogs (co-authored by Nick Lindsay, the CEO of Elemental corporate service provider and "market leader for Register of Overseas Entities services" and Tobias Latham, solicitor). In their article of 25 November 2022 they stated (based on Companies House data) that there were 4,844 registered overseas entities (which had jumped to 9994 by 31st December) but Land Registry figures suggest that, overall, 31,500 overseas entities need to register by 31st January 2023.
Speeding up the Process
Before it can be registered, an overseas entity needs to supply details of its registrable beneficial owners to Companies House. The process of identifying who are the registrable beneficial owners is not always straightforward. Additionally, the information needs to be verified by a UK regulated agent.
Companies House has acknowledged that an application can take longer to prepare than expected and, in a subsequent blog( see here) , Nick Lindsay and Tobias Latham set out some tips to help in the preparation and submission of the application. These could include providing an ownership structure chart, and supplying a full pack of documents. They also underline the fact that for trusts, additional details are needed (including information about the trust itself, all trustees since the land was acquired, as well as beneficiaries, settlors and any "interested persons" who have a level of control over the trustees).
In the blog, the authors acknowledge that not all entities will complete their registration in time. But they stress the importance of being able to "demonstrate that you've started the process and aim to complete it as soon as possible after the deadline…While Companies House cannot give you an extension, they may take this into consideration against any further enforcement action".
Clearly, collating and retaining such evidence will be essential if faced with enforcement action for non registration.
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