For those advising clients on the register of overseas entities under the Economic Crime (Transparency and Enforcement) Act 2022 (ECTEA), two important deadlines are looming.
Don’t miss the deadlines
The first deadline is to register the ‘overseas entity’ with Companies House. Most will be aware that failure to register by 31 January 2022 is an offence, and there are some hefty penalties in ECTEA.
To register, the overseas entity holding UK property must identify its beneficial owners and have them independently verified by an authorised verification agent.
The second deadline is a little more nuanced.
As part of the process leading up to registration, the overseas entity has to ‘take reasonable steps’ to identify its beneficial owners and obtain the prescribed information about them.
ECTEA puts in place a mechanism of information notices to be sent to beneficial owners, or those who can likely shed light on who the beneficial owners are. It is an offence for recipients to fail to respond or provide misleading information.
Sending information notices is not an optional exercise:
‘The [reasonable steps] that an overseas entity must take include giving an information notice under this section to any person that it knows, or has reasonable cause to believe, is a registrable beneficial owner in relation to the entity.’ – Section 12, ECTEA
Information notice recipients have up to one month to respond. So that adds an important date into the registration process.
Overseas entities should really be sending their information notices by the end of December 2022. Even that may be cutting it fine where the ownership structure is complex or beneficial owners are hard to locate.
Verification agents are likely to be unwilling or unable to complete the verification part of the registration unless responses to the information notices have been received.
Template information notice – register of overseas entities
A template information notice (and recipient response form) under Section 12 ECTEA can be found here. The wording can be altered slightly to fall within Section 13, where necessary.
January is likely to be a busy month for verification agents.