Background A Register of Overseas Entities was announced by David Cameron back in 2016 at an anti-corruption summit held in London. Other jurisdictions also confirmed they would take similar steps, though notable exceptions included the USA and the British Virgin Islands. The purpose of the development of a register was to target economic crime so that criminals could no longer purchase property in the UK and hide behind complex corporate structures to cover who actually owned the property. It has taken some time for the bill drafted back in 2018 to materialise into the Economic Crime (Transparency and Enforcement) Act 2022, finally hastened by the Russian invasion of the Ukraine and the fresh desire to identify property linked to Russia and money laundering generally. Steps that need to be taken 'Overseas entities' are broadly corporations, partnerships or other entities which are recognised by a foreign jurisdiction as having a legal personality. Where an overseas entity has purchased property, or has taken a 7 year or more lease, in England and Wales since 1 January 1999 it has until 31 January 2023 to report its beneficial ownership to Companies House. Furthermore, any future property purchases or leases (of 7 years or more) by overseas entities are required to be registered at Companies House, with the register being a publicly available record.
the land. Not only is the failure of an overseas entity to register property purchased/leased in England and Wales after 1 January 1999 a criminal offence - with every officer potentially facing criminal charges including fines and prison sentences - it will also mean restrictions being placed on the property to prevent any type of disposition, sale, or handling. Lenders, borrowers and charges Lenders to overseas entities will need to ensure finance documents are updated to include obligations for overseas borrowers to comply with registration requirements and make failure to do so an event of default. Lenders will also need to be mindful of acting in matters where there is a lack of transparency around the beneficial ownership of an overseas entity. The more complex the structure of the entity, the longer it will take from both a due diligence and registration perspective. Conclusion Where there are any questions about ownership and disposal of a property asset owned by an overseas entity, legal advice taken in a timely way will prevent criminal and other financial implications for investment property.
If you have any questions about the issues raised in this article, please contact James Oxley to discuss further.
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Failure to comply Failure to register new property acquisitions will mean that HM Land Registry will not register the Overseas Entity as the owner of
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