Nick Lindsay is a solicitor and chartered secretary from Elemental CoSec, a UK-regulated agent that offers clients a managed register of overseas entities service.
It turns out the 5th September is quite an important date. It bears the responsibility of being world samosa day, the UN’s International Day of Charity; and, according to the Procrastinators’ Club of America, is also ‘Be Late for Something Day’. This year it is also a critical date for overseas entities that may currently be in the process of buying property in the UK.
The new Register of Overseas entities rules came into force on 1st August 2022. The rules require overseas entities that either own UK property or are intending to acquire property in the UK to be registered with Companies House. That requirement includes the provision of details of beneficial owners which have to be verified by a UK-regulated agent before registration.
Overseas parties which are looking to buy or lease property soon have until 5th September to complete their transaction before the new rules kick in. After that date, the Land Registry will not be able to register an acquisition unless the entity has first registered and obtained an Overseas Entity ID. If there is a risk the transaction will complete after the 5th, they should consider registering immediately.
The challenge is that it’s not something which can be done overnight. Although the requirements mirror similar rules for those that own or control UK companies (the psc register) they are different enough to cause a number of firms to choose not to offer a register of overseas entities service to their clients. One of the main differences is that the information needs to be verified. Many firms lack the experience of carrying out this process on scale for overseas entities and there could be criminal sanctions for the verifier if they get it wrong. For this reason, professional bodies, like the Law Society, have recommended that their members “exercise extreme caution” if they are considering verifying information.
Overseas Entities should start the process sooner rather than later to identify who their beneficial owners are and begin the process of verifying and registering the information. This is especially the case if they have complex ownership structures and even more so if these structures include trusts.
It is also worth noting that the requirement to register is not confined to the purchase or lease of property. At Elemental Cosec, as UK-regulated agents, we have already come across instances where lenders are asking for registration before agreeing to financing or refinancing deals. And, although in theory disposal of property comes under the 31 January 2023 deadline, we are also aware of instances in which purchasers are requiring registration now before agreeing to proceed.
So remember, remember for those celebrating ‘Be Late for Something Day’ this year that are affected by the new rules, be sure not to be late to register your overseas entity.