Partly as a response to current events in Ukraine, the UK Government has brought forward the publication of the Economic Crime (Transparency and Enforcement) Bill (the "Bill"). The Bill will affect all non-UK entities (i.e. all those who are not individuals or UK companies) operating in the UK. It is yet to be finalised, but it proposes a new public register of overseas entities to identify the beneficial owners of overseas entities including those that hold land in the UK. It also makes changes to the Unexplained Wealth Order ("UWO") regime.

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The proposed register of overseas entities

The Bill proposes a new, public "register of overseas entities" to be maintained by Companies House. Each overseas entity is to provide specific information, including about its registrable beneficial owner(s) and "managing officers" (which includes a director, manager or secretary). The register covers all overseas entities who hold freehold titles or leasehold titles of more than seven years in England. These are referred to as "qualifying estates".

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Enforcement

The Bill has made it a general offence that if someone submits information which is false or misleading, then they will be potentially liable to a two-year prison term, or a fine, or both. The same liability occurs if the owner of a property is an overseas entity who has not registered and the Government serves a notice on that entity requiring it to register within 6 months.If this information is not annually updated, the overseas entity plus its officers will individually be liable for a fine – but not prison – and if the procedure is not further followed, a daily default fine up to £500.In order, therefore, to own property in the UK, such an overseas entity would have to be entered on the register of overseas entities, and this will also apply retrospectively. If not, the entity would face restrictions in the onward sale of the property.

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Disclosure of Beneficial Owners

The crux of the disclosure for overseas entities is the need to reveal the name and address of their beneficial owners.A "beneficial owner" is defined with reference to Schedule 1 of the Companies Act 2006 and is the same definition as a "person with significant control" (PSC) over a UK company. The "beneficial owner" of an overseas entity, therefore, is a person or entity which for which one or more of the following conditions apply:

• They hold, directly or indirectly, more than 25% in the overseas entity;
• They hold, directly or indirectly, more than 25% of the voting rights in the overseas entity;
• They hold the right, directly or indirectly, to appoint or remove a majority of the board of directors of the overseas entity;
• They have the right to exercise, or actually exercise, significant influence or control over the overseas entity;
• They are trustees of a trust, members of a partnership, unincorporated association or other entity which is not a legal person under the law by which it is governed; and they have the right to exercise, or actually exercise, significant influence or control over the activities of that trust or entity.

As is the case with the PSC register, there will be a limited protected disclosure regime which be set out in separate regulations. It appears that this will only apply if the publication of information would result in a serious risk of violence or intimidation.