Update: Economic Crime (Transparency and Enforcement) Act 2022

We advised you in our Summer edition that the Economic Crime (Transparency and Enforcement) Act 2022 (the Act) will affect property transactions entered into with overseas entities from its commencement.

The Act came into force on 1 August and on that day Companies House opened its Overseas Entities Register for registration by overseas entities that now, or in the future, own registered land (a freehold or a lease granted for more than seven years). Once registered Companies House provide an Overseas Entity ID to the applicant.

The important dates are as follows:

• From and including 5 September 2022 new acquisitions by overseas entities require the applicant to provide a valid Overseas Entity ID to HM Land Registry to enable registration to proceed.
• On completion of registration a restriction will be entered on the title preventing dealings with their title (a transfer, the grant of a lease for more than seven years or a charge).
• From and including 1 February 2023 similar restrictions placed on the titles of land already owned by overseas entities will come into effect in respect of those same dealings and a valid Overseas Entity ID must be supplied to enable registration of the dealing to proceed.

The Act contains some exceptions to the requirement to provide an Overseas Entity ID. One of these is where the entity is exempt from the requirement but the Regulations to define this have yet to be passed.

Another exception is for a contract entered into before the Act came into effect. The exception is not for contracts entered into after 1 August with a view to completing the transaction and submitting an application on or before 31 January 2023. If for any reason that application is delayed or fails any subsequent application would need an Overseas Entity ID.

The government has published guidance on how to register an overseas entity, including what information must be submitted and the requirement for verification checks by a UK regulated agent which can be found here.

A further Economic Crime and Corporate Transparency Bill 2022 is currently making its way through Parliament which will, amongst other things, strengthen Companies House by enabling the Registrar to ‘become a more active gatekeeper over company creation and custodian of more reliable data, including new powers to check, remove or decline information submitted to, or already on, the companies register’. There will also be changes to the Register of Overseas Entities to maintain consistency with changes to the Companies Act 2006.