Background

The Economic Crime (Transparency and Enforcement) Act came into force in the UK on 15th March 2022. It is anticipated it will have a significant impact on the affairs of overseas entities owning, acquiring, or disposing of land in the UK. The Republic of Ireland is categorised as an overseas jurisdiction for the purposes of the Register of Overseas Entities and the Act will apply to Irish companies owning land in the UK. The Act, which was rushed through the UK Parliament in direct response to the war in Ukraine, aims to improve financial transparency by providing additional powers to identify the wealth derived from economic crime, and the ability to impose criminal or civil sanctions for significant breaches. 

Register of Overseas Entities 

The Act will establish a publicly accessible ‘Register of Overseas Entities’ for entities owing land in the UK. It will apply to land in England and Wales (freehold or leasehold for terms of more than 7 years) purchased on or after 1st January 1999 and in Scotland (freehold or leasehold for more than 20 years) purchased on or after 8th December 2014. In Northern Ireland it will apply to land (freehold or leasehold more than 21 years) and the effective date is the date the register comes into force. Land disposals after 28 February 2022 will need to be disclosed on the register. An overseas entity is any legal entity which is governed by the law of a country or territory outside the UK. The register will be held at Companies House who have recently announced that they intend to launch it on 1st August 2022. The initial filing deadline will be 6 months from the date the new register comes into force (the transitional period).   The Act places a responsibility on an overseas entity, to provide information about itself and its beneficial owners. Such information on the entity will include its name, contact details, country of incorporation, legal form, and the law by which it is governed. The information required on beneficial owners will include their name, date of birth, the date they became a beneficial owner of the entity and the basis upon which they are deemed to be a beneficial owner.  In general, a beneficial owner is anyone who holds more than 25% of the shares or voting rights, can appoint or remove most of the directors, or can otherwise exercise significant influence or control.  Information will be required on initial registration and then be updated annually thereafter. Failure to do so may result in fines and penalties being imposed.

Offences, Penalties and Sanctions

The Act also creates several offences that could lead to up to 5 years in prison, fines of up to £2,500 per day of default, public "shaming" or restrictions on acquiring or selling UK land. Some of these offences include: 

• Not declaring, without reasonable cause, the details of beneficial owners
• Failure to comply with the annual updating duty
• Failure to comply with an information request from the registrar
• Providing the registrar with misleading, false, or deceptive information.
• Failing to update the register in respect of the sale of UK land between 28 February 2022 and the date of implementation.

What do you need to do?

Clients are strongly advised to ascertain if they have registration obligations under this new UK Act and if so to take steps as soon as possible to gather the required information to ensure compliance with the legislation within the transitional filing period.

How can we help? 

Cooney Carey are a full-service firm based in Dublin with a team of experts ready to guide you through the process of meeting your governance and compliance requirements. Please do not hesitate to contact a member of our company secretarial team should you require assistance in relation to the matters noted.

Disclaimer

Please note that the above are general comments only and should not be taken as advice. No actions should be taken or not taken in light of the above. If required, advice should be obtained under the terms of an engagement letter.