Once registered, an overseas entity must update its information annually, until it successfully applies to be removed from the register.

Various provisions of the United Kingdom’s Economic Crime (Transparency and Enforcement) Act 2022 came into effect 1 August 2022 with the intention of increasing transparency of the ultimate ownership of UK real estate and preventing the use of non-UK entities by those seeking to disguise ownership for the purpose of money laundering or other illegitimate purposes.

The Act has introduced new compulsory requirements for any non-UK corporation, partnership or other overseas entity that is a legal person under its governing law and owns or acquires a qualifying estate in any real estate in the UK to register itself and details of its managing officers (e.g., director, manager or secretary) and beneficial owners at the UK Companies House in a newly created Register of Overseas Entities (ROE).

What Is a Qualifying Estate in Real Estate?

A qualifying estate means either ownership of real estate or holding a lease of real estate that was granted for a term of more than seven years (at the date of grant). The Act makes no distinction as to the nature or use of the real estate and will apply to any qualifying interest regardless of whether the real estate is used for residential or nonresidential purposes.

Who Are the Beneficial Owners?

Broadly, a person is a "beneficial owner" of an overseas entity if one or more of the following conditions (beneficial owner conditions) are met:

• That person (directly or indirectly) owns more than 25 percent of the shares (or has a right to more than 25 percent of the entity’s capital or profits, where the entity has no share capital) in the overseas entity.
• That person holds (directly or indirectly) more than 25 percent of the voting rights in the overseas entity.
• That person holds the right (directly or indirectly) to appoint or remove a majority of the board of directors/management body of the overseas entity.
• That person has the right to exercise, or actually exercises, significant influence or control over the overseas entity.
• In relation to an overseas entity that is not a legal person under its governing law, e.g., a trust, partnership or unincorporated association, that person as a trustee, member or the like of the overseas entity must meet one or more of the above conditions in relation to the overseas entity; and that person must exercise, or have the right to exercise, significant influence or control over the activities of the overseas entity.

More About the ROE

Most of the information in the ROE, including details of beneficial owners, will be publicly available. However, personal information such as home or email addresses and full dates of birth will not be publicly available.

Once registered, an overseas entity must update its information annually, until it successfully applies to be removed from the register.

What Happens If an Overseas Entity Fails to Register?

Failure to register will be subject to criminal and financial penalties for the overseas entity and each of its officers in default, and will also restrict any overseas entity’s ability to acquire, sell or grant security over a qualifying estate.

Next Steps

If you own or manage an overseas entity that holds a qualifying estate in UK real estate, you should ensure that it applies for registration in the ROE before 31 January 2023.

Any overseas entity that disposes of all its UK real estate interests between 28 February 2022 and 31 January 2023, whilst not required to apply for registration in the ROE, has an obligation to provide certain information about those dispositions to the Registrar of Companies before 31 January 2023.

If an overseas entity wishes to acquire a new qualifying interest in UK real estate, it will now need to register before that transaction takes place.

For More Information

If you have any questions about this Alert or registry with the ROE, please contact Milan A. Patel, Linda J. Crow, any of the attorneys in our London office, any of the attorneys in our Real Estate Practice Group or the attorney in the firm with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.