Business

Looking at the Register of Overseas Entities

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KellyAnne Murtagh

QUESTION: I operate a company in Republic of Ireland which owns property in Belfast that is let out to commercial tenants. It has come to my attention that in the UK, the government is introducing a Register of Overseas Entities, are we required to register and what is involved?

ANSWER: The UK government introduced a ‘Register of Overseas Entities' requirement which relates to foreign owners of property, effective from August 1 this year. The aim of which is to improve transparency, allowing law enforcement agencies to investigate suspicious wealth more effectively.

Overseas entities who want to buy, sell or transfer property or land in the UK, must register with Companies House and disclose who their registrable beneficial owners or managing officers are by January 31 2023.

The register applies retrospectively to property bought since December 2014 in Scotland and since January 1999 in England and Wales. However, overseas entities with property or land in Northern Ireland only need to register those bought on or after August 1.

Entities that dispose of property or land after February 28 2022 will also need to register and give details of that disposal.

After registering, the overseas entity will get a unique Overseas Entity ID to give to the land registry when it buys, sells, transfers, leases or charges UK property or land.

Should overseas entities decide not to register with Companies House Register of Overseas Entities, not only will they face restrictions when buying, selling, transferring, leasing or charging property or land in the UK, but they could be fined up to £2,500 per day or get a prison sentence of up to five years.

Upon initial registration you must disclose any beneficial owner that has significant influence or control over the overseas entity along with the nature of control.

Beneficial owners can be an individual person, another legal entity, such as a company, a government or public authority, a trustee of a trust, a member of a firm that is not a legal person under its governing law. Natures of control can be any of the following;

• Holds, directly or indirectly, more than 25 per cent of the shares in the entity

• Holds, directly or indirectly, more than 25 per cent of the voting rights in the entity

• Holds the right, directly or indirectly, to appoint or remove a majority of the board of directors of the entity

• Has the right to exercise, or actually exercises, significant influence or control over the entity

• The trustees of that trust (in their capacity as such) hold, directly or indirectly, more than 25 per cent of the shares in the entity

• The trustees of that trust (in their capacity as such) hold, directly or indirectly, more than 25 per cent of the voting rights in the entity

• The trustees of that trust (in their capacity as such) hold the right, directly or indirectly, to appoint or remove a majority of the board of directors of the company

• The trustees of that trust (in their capacity as such) have the right to exercise, or actually exercise, significant influence or control over the company

• The members of that firm (in their capacity as such) hold, directly or indirectly, more than 25 per cent of the shares in the entity

• The members of that firm (in their capacity as such) hold, directly or indirectly, more than 25 per cent of the voting rights in the entity

• The members of that firm (in their capacity as such) hold the right, directly or indirectly, to appoint or remove a majority of the board of directors of the company

• The members of that firm (in their capacity as such) have the right to exercise, or actually exercise, significant influence or control over the company

An additional hurdle in the registration process is the need for the information submitted as part of an overseas entity's application to register at Companies House to be verified by a "relevant person." Certain lawyers, accountants and regulated company secretarial service providers can assist with this verification step.

Additionally the overseas entity must file an annual update to Companies House one year after it was registered, and every year after that. This will be used to inform of any changes or confirm that the information held is still correct. It must be filed no later than 14 days after the due date. It can also be filed earlier if any information needs to updated. This annual return will also need verified by a “relevant person”.

An overseas entity can apply to be removed from the Register of Overseas Entities if it is not, or is no longer, a registered owner of land or property in the UK.

:: KellyAnne Murtagh (k.murtagh@fpmaab.com) is senior manager at FPM Accountants Ltd (www.fpmaab.com). The advice in this column is specific to the facts surrounding the question posed. Neither the Irish News nor the contributors accept any liability for any direct or indirect loss arising from any reliance placed on replies

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