UK Register of Overseas Entities: Time to review and update

Owners and investors with interests in real estate in the UK will be aware of the obligations on non-British “overseas entities” to comply with the UK’s Economic Crime (Transparency and Enforcement) Act 2022 (the “ECA 2022”) detailed in our briefing of September 2022, here. Overseas entities who have qualifying interests in real estate in any part of the UK, including a lease, must register on the Register of Overseas Entities (the “Register”) maintained by the UK’s Companies House. Registration is necessary in order to be able to continue to deal with the property and to avoid potentially significant civil and criminal sanction.

The obligation to register commenced on 1 August 2022, with all affected overseas entities at that time being required to register by 31 January 2023. Overseas entities acquiring new qualifying interests are required to register within the relevant time frame for each acquisition. There is also a continuing obligation to update the Register annually, within two weeks of each anniversary of registration by an overseas entity.  All entities on the Register need to file this update statement to confirm that the information provided is correct and up to date, even if nothing has changed.

Since 21 June 2023, the criminal fines and provision for imprisonment in the ECA 2022 have been supplemented by additional powers for Companies House (under the Register of Overseas Entities (Penalties and Northern Ireland Dispositions) Regulations 2023) to impose potentially very extensive civil financial penalties for non-compliance. Under the Money Laundering and Terrorist Financing (Amendment) (No. 2) Regulations 2022 persons who have a business relationship with an overseas entity must also review the Register and report to the registrar if there are any material discrepancies between the information entered on the Register and the information obtained by the person for the purposes of their business relationship with the overseas entity.

The Register is a key part of the UK’s strategy to tackle the use of UK real estate as a vehicle for the proceeds of global economic crime. These latest legislative developments point towards the UK taking a very active interest in the proper maintenance of it. As we move past the first anniversary of the commencement of the legislation, the obligation to file an annual update statement is something that would be important for every overseas entity to attend to in consultation with their UK counsel and advisers.