LS Legal News Bulletin
Compulsory registration for overseas entities BVIs
Tuesday 29th November 2022
On 15th March 2022, the government introduced compulsory registration for overseas entities (ROE) owning property in the UK, including entities incorporated in the British Virgin Islands (BVIs), at UK's Companies House and Land Registry.
The Economic Crime (Transparency and Enforcement) Act 2022 (ETCA) imposes obligations on overseas businesses owning a freehold or leasehold with a term of more than seven years (known as "qualifying estate") to provide details and register its beneficial owners by 31 January 2023.
Much like the current requirements for UK companies having Persons with Significant Control (PSCs), the ETCA registration requirement applies to BVI beneficiaries directly or indirectly owning 25%; this includes ownership of shares, voting rights and control over the appointment of officers of the entity.
If the beneficial owners cannot be identified, the BVI must provide information on its managing officers, and in cases where the BVI is operated by a trust, information on the trust and its trustees will need to be made available.
Once identified, the beneficial owners or managing officers must provide registration documents from overseas legal entities with their personal information for verification checks with a UK-regulated agent, who will produce a verification check statement to be submitted to UK's Companies House.
Upon registration with Companies House, the overseas entity will receive a unique Overseas Entity ID to be provided to the Land Registry when it purchases, sells, transfers, leases, registers a legal charge or otherwise disposes of UK real property.
The ETCA applies retrospectively to those BVIs that have acquired a property in the UK on or before 1 January 1999 in England and Wales. Entities will not be able to dispose of or otherwise deal with the properties until they are duly compliant with the new Act.
For BVIs potentially acquiring properties, the verification checks will have to be completed at least three months before the proposed registration of the "qualified estate".
The BVIs will also have to comply with annual reporting obligations, either confirming the previously supplied information or ensuring that up-to-date information is promptly provided.
Failure to comply with ETCA obligations constitutes a criminal offence committed by the entity and its officers and carries a daily fine of £2,500.00 or imprisonment up to 5 years.