Transparency implications for non-UK entities owning UK Real Estate in light of the Economic Crime (Transparency and Enforcement) Bill
09 MAR 2022
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.
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”.
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.
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.
Yulia BarnesManaging Partner
Yulia Barnes is our Managing Partner. She is an experienced solicitor and advises on a wide range of contentious and non-contentious matters for both private and corporate clients.Yulia started her legal career at a large international Magic Circle firm. She then became a partner at a regional law firm and headed a Dispute Resolution Department. She then moved in-house before starting her own Boutique practice, Barnes Law, with the aim of providing exclusive services to high net-worth individuals and privately-owned businesses. More details can be found on her LinkedIn profile.
Expertise Yulia and her team are widely recognised for their professional and practical approach to matters. She is committed to ensuring that her clients’ objectives are achieved in the most cost-effective way possible.
Approach Yulia has a wealth of experience working with businesses of all sizes: from large multinational corporations to start-ups. She has particular expertise in a hospitality industry, investment funds, private and corporate clients, and focuses on startups and technology-driven companies. Yulia brings the same level of attention to detail, professionalism and a personal touch to every case and client, and truly immerses herself in her clients’ businesses. She prides herself on her problem-solving, commercially astute approach and her track record of partnering with clients to help them achieve their strategic objectives.
Will joined Barnes Law as an Associate Solicitor in Spring 2023, shortly after qualifying in September 2022.
Will works mostly on real estate and corporate/commercial matters. Will enjoys providing advice on transactional matters.
Away from the office, Will can be found reading or playing golf. While he played rugby until university, and rowed throughout his degree, he now tends to watch both from the sidelines. During the winter he can also be found skiing.
Will plans to continue developing his legal skills and experience at Barnes Law, under the expertise and guidance provided by Yulia.
Mark is an experienced solicitor whose practice areas include intellectual property (IP), IT, data protection and general commercial law.
Mark advises businesses of all sizes – from sole traders to corporations. Among his clients are: clothing and lifestyle brands, restaurants and food suppliers, IT companies, banks, hedge funds and venture capital firms, education providers, medical and pharmaceutical brands.
Outside of his practice, Mark also advises members of the Institute of Directors as part of its Directors’ Advisory Service.
- Prosecuting a UK trademark application on behalf of an education provider and representing them in related UK IPO opposition and revocation proceedings;
- Advising a publisher and a delivery business on data protection matters, B2B and B2C Ts & Cs of sale, website and app Ts & Cs, all aspects of global brand protection;
- Advising footwear brands, alternative asset managers and hedge funds on their global brand protection, including overcoming various refusals, representing them in opposition proceedings and settlement negotiations;
- Representing a central bank in opposition proceedings before the UK IPO;
- Advising a lifestyle brand concerning trademark clearance and protection, negotiations for a website/app development and maintenance agreement.
Ioulia TatawatFamily Law Adviser
Ioulia has a solid background in family law and offers guidance, clarity, and support to clients during one of their most challenging times in their life.
She advises on all three pillars of separation: divorce, children matters and financial settlements. Ioulia is a member of Resolution and is keen to try to settle matters at early stages.
Ioulia is dedicated to assisting clients and navigating them through their legal matters with clarity and support.
Alex joined Barnes Law in September 2023 after finishing his master’s degree in law. Prior to joining Barnes Law, Alex worked in property litigation at Ashfords. Alex assists Yulia on a variety of both contentious and non-contentious matters.
Outside of the office, Alex enjoys reading and hiking. Prior to working in law, Alex was a competitive tennis player.
Alex continues to develop his skills in legal practice under Yulia’s guidance, he plans to sit the Solicitor’s Qualifying Exams (SQE) in 2024.
Mehves joined Barnes Law in August 2023, right after graduating from Queen Mary, University of London (LLB Senior Status). As part of her qualification journey, Mehves is currently pursuing her Legal Practice Course (‘LPC’) at the University of Law. She also holds a degree in European Union Law from Maastricht University, Netherlands.
Mehves works closely with Yulia on a variety of contentions matters and also writes Barnes Law’s legal blogs, manages social media accounts and is responsible for marketing.
Outside of work and studies, she enjoys running, tennis and yoga.
Mehves is looking forward to developing her legal skills at Barnes Law.
Julia PodgornovaInvestor Relationship Manager
Julia guides clients in making important business decisions based on comprehensive risk assessment and strategy. She supports investors in devising strategies designed to maximise each business’s potential from pre-seed to IPO.
Julia’s particular area of expertise are IT start-ups at different stages. Julia supports business through their fund-raising journey. As an Investor Relations Manager, Julia communicates with investors to facilitate a smooth round and legal part of each transaction.
In her free time Julia enjoys sailing, ballroom dancing, art exhibitions and travel.