Introduced following Russia’s invasion of Ukraine, the new legislation will mean the UK government can move more quickly to impose sanctions against oligarchs already designated by our allies, as well as intensifying sanctions enforcement. 

Reforms to Unexplained Wealth Orders (UWOs) will remove key barriers to their use, and have been designed to be more effective against those who hold property in the UK via trusts and other complex ownership structures. The government has also committed to publishing an annual report on their use. 

In addition to the changes to the UK sanctions regime and UWOs, a new Register of Overseas Entities, requiring those behind foreign companies which own UK property to reveal their identities, will be created under the Act. Entities which refuse to reveal their ‘beneficial owner’ will face tough restrictions on selling the property and those who break the rules could face a fine of up to £2,500 per day or up to five years in prison. 

Companies House has begun work to implement the register as quickly as possible, working closely with the UK’s three land registries. Any foreign company selling properties between 28 February and the full implementation of the register will also be required to submit their details at the point of sale. 

The Register of Overseas Entities has been designed to: 

• Provide more information for law enforcement to help track those using UK property as a money laundering vehicle; 
• Require anonymous foreign owners of UK property to reveal their real identity to ensure criminals cannot hide behind secretive chains of shell companies; 
• Level the playing field with property owned by UK companies, which already need to disclose their beneficial owners to Companies House; 
• Impose sanctions for non-compliance, including restrictions on registering or disposing the title of the land; 
• Apply retrospectively to property bought since January 1999 in England and Wales and since December 2014 in Scotland. 

The Register of Overseas Entities will apply to: 

• The measures will apply to foreign owners of UK property and will apply to: 
• Any company or similar legal entity that is governed by the law of a country or territory outside the UK (overseas entity); 
• Individuals who have significant influence or control over the entity, for example they hold 25% or more of the shares or voting rights (beneficial owners). 

What will happen if they don’t comply? 

If a foreign company does not comply with the new obligations, its managing officers can face criminal sanctions, including fines of up to £2,500 per day or a prison sentence of up to five years. The UK government is also introducing civil sanctions in the form of financial penalties and an overseas entity will face restrictions when trying to sell or lease their land. 

If they are already registered, they will face restrictions over dealing with their land. 

What are the requirements to own land in the UK? 

An overseas entity will be required to identify its beneficial owner(s) and to register them with Companies House.  Information supplied to the register will be required to be verified. 

Once registered, an overseas entity ID number will be provided and the entity will be required to update its information annually, until such time as it successfully applies to be removed from the live Register of Overseas Entities. 

To register title to land, an overseas entity will have to demonstrate it is registered and must comply with the duty to update information. 

Why is this important for UK Company Secretaries? 

UK companies with overseas entities holding UK property will have to submit information on beneficial owners (of the land-owning entity) to the Register (ie, those owners that hold more than 25% of the shares or voting rights in an entity; can appoint or remove a majority of its directors; or have some other significant influence or control over it). This role may be undertaken by the group Company Secretary or other role sitting within the UK entity. 

Schedule 1 to the Act sets out the information to be provided about the overseas entity. 

There will be a limited time in which information must be submitted and, importantly, the Act applies retrospectively to all overseas entities that purchased property in England and Wales on, or after, 1 January 1999 and in Scotland after 8 December 2014. Information on these properties must be submitted within six months of the commencement date. 

Bridgehouse can provide advice and guidance and help your company comply with the new regulations, ensuring that all your paperwork meets the new requirements.