Economic Crime (Transparency and Enforcement) Act Provides Transitional Period

The Act applies, in the case of England and Wales, to all transactions since January 1, 1999, involving:

• Transfers of a qualifying estate to an overseas entity;
• Transfers of a qualifying estate by an overseas entity (if the transfer took place on or after February 28, 2022);
• Registrable leases for a term of more than seven years from the date of grant to an overseas entity, which are granted out of a qualifying estate;
• Registrable charges by an overseas entity;
• Applications for first registration of a qualifying estate where the applicant is an overseas entity; and
• Adverse possession applications to register an overseas entity as proprietor of a qualifying estate.

For the purposes of the Act, “qualifying estate” means a freehold estate in land or a leasehold estate in land granted for a term of more than seven years from the date of the grant.

The rules for determining whether someone is a registrable beneficial owner are complex, particularly where the ownership structure has more than one layer or involves trusts or foundations, but in summary a person or corporate entity will be registrable if, in relation to the overseas entity, they (or a trust or firm which they control) own more than 25% of the shares or voting rights, have the right to appoint or remove a majority of the board of directors, or they have significant influence or control over the overseas entity. Should an overseas entity not have a registrable beneficial owner (or cannot identify the beneficial owner and/or provide the relevant information), then details of each managing officer of the overseas entity must be provided.

Schedule 1 of the Act sets out the information that must be provided about the overseas entity, which includes its name, country of incorporation, registered office and an email address. Part 3 of Schedule 1 focuses on the information required for beneficial owners, which includes their name and date of birth, residential address and the date on which the individual (or government / public authority) became a registrable beneficial owner in relation to the overseas entity. Part 4 details the information required for managing officers. Part 5 is regarding trusts.

The process is more challenging because of the requirement that before an overseas entity can apply for registration at Companies House and obtain an overseas entity ID, the “relevant information” must be verified as detailed in the Register of Overseas Entities (Verification and Provision of Information) Regulations 2022 No.725 by a “relevant person,” i.e., in accordance with the Money Laundering Regulations. The relevant person who has verified the relevant information on behalf of the overseas entity must subsequently provide a statement confirming that the verification process has been undertaken in accordance with the Regulations and the Act, along with details of the beneficial owners and managing officers identified.

Should you fall under the requirements of the Act, or you are a bank with clients which fall under the regulations, we are a relevant person and here to help.

If we can be of assistance, please contact james.campbell@pillsburylaw.com or sarah.browne@pillsburylaw.com