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increased transparency requirements for overseas entities owning UK real estate

6 August 2018

This article is taken from August's public matters newsletter. Click here to view more articles from this issue.

Since March 2016 the government has been consulting on measures to enhance the transparency of beneficial ownership information in respect of overseas entities that buy UK land or that enter into public procurement contracts in the UK.

This has now resulted in the publication of the Draft Registration of Overseas Entities Bill (Bill), which requires any overseas entity (being a legal entity governed by the law or a territory outside of the UK) that wishes to own UK land to take steps to identify their beneficial owners (and, if applicable, its managing officers) and to register them at Companies House. This register will largely be accessible to the public and the government hopes that it will combat crimes such as money laundering by increasing transparency. The Bill states that non-compliant entities will face restrictions on buying and selling land in the UK – as well as imposing criminal penalties (of up to five years in jail) for failing to comply.

The process for determining who will qualify as an overseas entity’s beneficial owner is modelled on the current PSC regime for UK companies and other UK entities. This was brought into force in April 2016 and sets out how UK entities must take steps to identify persons with significant influence and control over them and to record them in their internal company books and publicly at Companies House.

Under the provisions of the Bill, once registered at Companies House, an overseas entity will obtain an ID number and will be required to update its information annually (either by delivering updated information or confirming that the information already provided is still up to date), until such time as it applies to be removed from the register. Failure to register or comply with the updating duty will result in:

  • the overseas entity being unable to register as proprietor of land in the UK (this is required in order to obtain full legal title to that land)
  • certain dispositions made by an overseas entity registered proprietor being incapable of registration at the UK land registries.

In practice, this means that non-compliance will usually affect the ability of the overseas entity to either sell or lease the land, or create a charge over it.

Interestingly, the recently published Bill only covers the registration of beneficial owners of overseas entities owning UK land and doesn’t also refer to the registration of such entities entering into public procurement contracts in the UK - these two aspects had previously been consulted on together. The government has confirmed that a separate mechanism will be introduced regarding overseas entities wanting to engage in UK central government procurement. It is understood that such entities will be required to give information about who beneficially owns them as a condition of being awarded contracts that meet certain conditions or thresholds. Further details on this are expected to be published separately.

Comments on the draft Bill are requested by 17 September 2018 – and it is anticipated that the register will go live in 2021.

For more information on the Bill, please see:

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