1 August 2023 marks the first anniversary of the launch of the register of overseas entities (the Register) at Companies House under the Economic Crime (Transparency and Enforcement) Act 2022. This Act required overseas entities which own, or are intending to buy, lease (for more than seven years) or charge UK property to declare and register their beneficial owners or managing officers with Companies House.

According to the latest Companies House blog from 23 June, there are more than 28,000 entities on the Register, and the information on the Register has been searched more than 500,000 times. The government state that this high number of searches shows the Register is meeting the policy intent of increasing transparency about who owns UK property.

So what happens next?

From 1 August, in order for an overseas entity to retain a valid overseas entity ID number, an annual update statement must be filed at Companies House confirming that the information held on the Register is correct and up to date. This confirmation is required regardless of whether or not any changes to the overseas entity (and its beneficial owners) have been made. The statement must be filed within one year of the date that the overseas entity was entered on the Register (or within a year of the last update statement). There is a 14 day grace period from the anniversary date to file the update statement, which means practically the entity will have up to one year and two weeks of the initial registration date to file the first statement (although we advise submitting the update statement as close to the anniversary date as possible). If an overseas entity files the statement after this date; the overseas ID number will become invalid until the position has been rectified. Whilst the overseas ID number is invalid, the overseas entity will be unable to buy, sell, transfer, lease, or charge UK property.

Overseas entities can check their update statement date by searching the Companies House Register. Companies House state that they will be sending an email reminder about the legal requirement to file an annual update statement to the email address they hold on record for each entity to assist prompting compliance.

There are a few key things to note when filing the update statement:

  • any changes made to the update statement, for example, adding a new beneficial owner, must be verified by a UK-regulated agent no more than three months prior to the date of the update statement.
  • each update statement can only cover a 12 month period. Any additional periods (up to a period of 12 months) must be covered in a separate update statement.
  • most entities will be able to file their update statement online using an authentication code (which can be requested via the Companies House website). However, where any trusts are involved, an update statement must be filed using a paper form, which will be made available in the coming weeks (see the Companies House blog for more details).

To aid enforcement, Companies House may issue financial penalties to overseas entities who have either not yet registered on the Register, or who have failed to comply with their annual updating duty. Failing to comply means that the overseas entity and its’ officers commit a criminal offence. It is therefore imperative that any overseas entity which owns UK property and is not on the Register (and should have been by the end of the transitional period on 31 January 2023), completes their registration as soon as possible to avoid civil penalties or potentially criminal prosecution. 

Companies House have the power to issue fines of up to £50,000 per property, however the guidance states that any fixed financial penalties will be based on several factors, including the property value. Also, as the Land Registry have entered restrictions on the registered titles of all land owned by overseas entities, any overseas entity that has failed to register with Companies House will be unable to satisfy the restriction, which will prevent them from selling, leasing, or charging their property.