Compulsory reporting of BVI Companies Holding UK Property by 15th August 2022
The BVI Financial Services Commission (“FSC”) has been contacted by representatives in the UK with respect to the UK Government’s introduction of the Economic Crime (Transparency and Enforcement) Act 2022 which came into force on 15 March 2022 (the “Act”) which introduces a new requirement for overseas entities and for your purposes relates to BVI companies owning the UK residential and commercial property (freehold or leasehold) and land (“UK Property”) to register at UK Companies House and provide details of beneficial ownership. We would not normally send information in respect of legislation being introduced in other jurisdictions however as the BVI FSC has been contacted directly we would like to inform you of this.
Please note that the deadline for registration for BVI companies which presently own UK property is 15th August 2022.
• Registration
BVI companies will be required to register and provide details of their beneficial owners to UK Companies House before they can be registered to hold UK Property. The register will be publicly accessible.
Information to be provided for registration purposes will include details of the BVI company and its beneficial owners. Pursuant to the Act “beneficial owners” are those persons who have significant influence or control over the overseas entity, and includes but is not limited to:
- persons directly or indirectly owning more than 25% of the shares or voting rights in the overseas entity;
- persons exercising (or having the right to exercise) significant influence or control over the overseas entity;
- in relation to trusts, the corporate trustees of that trust and any registrable entity who exercises (or has the right to exercise) significant influence or control over the activities of that trust.
• Consequences of failing to register
Failure to register will prevent the BVI company from being able to buy or sell UK property. A transfer of land in breach of the registration requirements would amount to a criminal offence on both the entity and its responsible officers. Failure to identify the beneficial owner(s) of the property will effectively cause the property to be frozen, with the “owner” being unable to lease, sell or raise a mortgage on it.
Under the Act, it is a criminal offence to deliver misleading, false or deceptive information or to fail to provide an annual update on information (including confirmation that no reportable changes have occurred).
Depending on the breach, penalties may range from fines of £2,500 a day to unlimited fines (likely to be applied, where a materially false statement is made) and custodial sentences.
• Reporting
Once registered, the BVI company is issued an ID number, and the will be required to update its information annually.
The requirement to register will apply retrospectively to BVI companies which have acquired property on or before 1 January 1999 in England and Wales.
For BVI companies which fall into this category, the deadline to register is 15th August 2022. If a sale occurs after 28 February 2022 but before a company is registered the selling entity still has an obligation to register with Companies House by the end of the transition period.
There will be a short transition period of six months from the commencement of the Act to allow overseas entities who already own UK property to register.
• Next steps
Please reach out to your usual Bolder contact should any one or more of your BVI companies own or control UK Property so that we can assist you with this process.
BVI companies that already own UK Property, or are about to sell or acquire UK Property, will need guidance as to their obligations pursuant to the Act.
For further questions please contact our team at BGA Law, our associated law firm:
