Register of Overseas Entities – What next?

It has now been several months since the deadline to register an overseas entity has passed. As many may be aware, under the new Economic Crime (Transparency and Enforcement) Act 2022 (“2022 Act”), every entity incorporated outside of the UK that owns or leases a property for more than seven years is legally required to register with the Register of Overseas Entities maintained by Companies House. The information the entity provides to Companies House has to be verified by a UK registered verification agent, such as Saville Notaries. The Government and Companies House have indicated initially that the penalty for non-compliance with the required registration would involve criminal liability and will include fines or even imprisonment.

Thus far, no fines have been issued, nor have any criminal (or even civil) procedures been brought by CPS or Companies House against overseas entities that failed to be registered. Nevertheless, we know that several months before the registration deadline of 31 st January 2023, HM Land Registry issued and entered restrictions against all property (freeholds and leaseholds) where the proprietor is indicated to be an entity not incorporated in the UK and which is yet to be registered on the Register of the Overseas entities. Indeed, Schedule 3 of the 2022 Act has empowered HM Land Registry to enter unilateral restrictions against the relevant property without the proprietor’s consent. The said restriction prohibits any disposition and dealings with the property after 31 st January 2023. Therefore, even if the entity does not wish to spend time and resources to register now, it will still require to do so when it wishes to sell, transfer or grant a lease or a legal charge (e.g. mortgage) over the property in the future.

It is not yet known how strict the application of penalties will be on the overseas entities and their beneficial owners who have failed to register under the 2022 Act. However, it will become clearer in the coming months if Companies House begins to issue warnings and consequent fines to the “unregistered” overseas entities and/or HM Land Registry refuses to remove the abovementioned restrictions until proof of the payment of penalties and subsequent registration is produced.

It is certain that under the 2022 Act, if any overseas entity wishes to buy a freehold or leasehold (for longer than seven years) after 31 st January 2023, the entity must be registered with Companies House.

If you or any of your clients are required to register with the Register of Overseas Entities, our friendly and professional team of Saville Notaries will be glad to assist you. Our dedicated team of specialists in international, commercial and notarial laws and knowledge of multiple overseas jurisdictions ensures professional, fast and reliable services for the overseas entity’s verification and registration.

By Roman Egorov (Trainee Notary)