The UK’s Economic Crime (Transparency and Enforcement) Act 2022 (ECTE Act) originally implemented the Register of Overseas Entities regime in 2022 and as of 21 December 2023 has resulted in over 30,000 registrations at Companies House. In this Focusing on Funds we look at recent and upcoming changes to the Register of Overseas Entities regime made by the Economic Crime and Corporate Transparency Act 2023 (ECCT Act) and the implications for funds and other investors owning real estate in the UK through non-UK legal entities. What is new   The ECCT Act, which forms part of the UK’s ever expanding focus on implementing and enforcing transparency and enforcement legislation relating to economic crime and transparency of ownership, has amended the ECTE Act to expand the Register of Overseas Entities regime to include the following new re­quire­ments:Over­seas entities holding property as nominees must look through to the owners of the land for its  registrable beneficial owners (previously it only looked through to the owners of the nominee). Any legal entity in the overseas entity’s beneficial ownership chain that is a trustee (whether or not a professional trustee) is disclosable as a registrable beneficial owner, together with the supporting trust information. An overseas entity must disclose its principal office (previously it was possible to disclose its registered office instead). Likewise, it must disclose the principal office, rather than the registered office, of any registrable beneficial owner that is a legal entity. Tougher information and compliance requirements including the potential loss of registered status and the ability to deal with land. Other upcoming changes There are a number of other notable changes to the Register of Overseas Entity regime that will be brought in by the ECCT Act, but the Government has not yet indicated when these will come into force. These changes include:A requirement to provide the title number of the relevant property to Companies House – though this information will not be publicly available on the Register.A requirement to disclose the registrable beneficial owner(s) of the overseas entity between the period of 28 February 2022 and 31 January 2023. Further information is set out below. Fund managers and other investors in UK real estate should consider their UK land ownership structures, alongside any upcoming acquisitions and disposals, including certain leases in progress, to understand the implications on their organisations of the Register of Overseas Entities regime, including the latest and upcoming changes. . The Register of Overseas Entities – a recap and its implications The Register of Overseas Entities (the Register) is a separate public register at Companies House for non-UK legal entities (overseas entities) that directly own or acquire qualifying UK real estate. It was established by the ECTE Act and launched on 1 August 2022. The relevant overseas entity is required to give comprehensive information about itself, its ‘registrable beneficial owner(s)’ (including, where the registrable beneficial owner is a trustee, information about the trust) and, in some circumstances, its managing officers. UK companies (and other UK entities)  have to disclose their beneficial owner on a separate register under the People with Significant Control (PSC) regime. Information contained on the Register is for the most part available to the public. Overseas entities owning UK real estate (in particular, property registered since 1 January 1999 in England and Wales and since December 2014 in Scotland), or that have made disposals of UK real estate since 28 February 2022, originally had six months since 1 August 2022 to register on the Register. Overseas entities seeking to acquire UK real estate (freeholds and grants of leases of more than seven years) need to be registered on the Register at Companies House before an acquisition can be registered at the Land Registry.  For further detail regarding the implications of the Register for UK real estate transactions, including Land Registry requirements, see our Law Now “Important deadline imminent for Economic Crime Act”. Overseas entities on the Register are required to annually confirm and, when relevant, update their information on the Register, and can apply to be removed from the Register when they cease to hold qualifying UK real estate. For more information on the updating duty, see our Law Now “Be aware of the updating requirements for overseas entities at Companies House”. There are fines and criminal penalties for non-compliance – and non-compliance will seriously impact an overseas entity’s ability to acquire, sell, let or charge UK real estate. Scotland has its own transparency regime, the Register of Persons Holding Controlled Interests in Land, that applies there in addition to the Register of Overseas Entities regime. For more information on the Scottish regime, see our Law Now “Register of Persons Holding a Controlled Interest in Land – (cms-lawnow. com)”. Overseas entity The obligation to register under the ECTE Act is on the ‘overseas entity’, which is a body corporate, partnership or other entity that (in each case) is a legal person governed by non-UK law. The overseas entity needs to provide specific information about itself, any ‘registrable beneficial owners’ (including, where the registrable beneficial owner is a trustee, information about the trust) and, in some cases, its managing officers to Companies House as part of its application to register on the Register. The information contained in the application for registration must be verified by a registered verifier. Information provided in the annual update statement must also be verified. Registrable beneficial owner(s) Overseas entities that register on the Register will need to identify their ‘registrable beneficial owner(s)’. A beneficial owner is an individual, a legal entity or a government or public authority (X), who meets any of the following conditions in relation to the overseas entity (Y):

Updated on December 2023 Investment vehicle UK Limited Partnership [Private Fund Limited Partnership]UK Unauthorised Exempt Property Unit TrustOpen-Ended Investment Company (OEIC)Authorised Contractual...

 

The world in which the international funds industry operates is changing at unprecedented speed. The economic consequences of Covid-19 present a massive challenge to some funds and an opportunity to others...

Periodically, CMS takes soundings on the state of the market from our funds-related clients. Given the unprecedented nature of the last 12 months we thought this was an opportune time to look back over the last few years. This study analyses the key market trends in fund documentation of over 300 funds established in Europe, Asia, USA and offshore jurisdictions advised on by CMS offices throughout 2017 to 2020. We have also conducted client interviews, which are highlighted in this report, and conducted a selective survey of our international client base. We trust this CMS Funds Market Study will be a useful guide for both managers and investors this year. The size of our deal sample and the range of countries involved means that the study should be a uniquely valuable and rich resource for managers and investors. Our research indicates that funds industry players are clear on how to move forward and that, while strategies may have shifted, there are reasons for optimism and bullishness, unlike the gloom that descended after the global financial crisis in 2008. Looking forward we see an active funds market, with Luxembourg being the jurisdiction of choice for European funds. ESG is now a key focus for investors. This market impetus and regulatory drivers are moving sustainable investment from a niche focus into the mainstream for investors and managers alike. We also see managers increasingly looking at the benefits and impact of AI and technology with the tokenisation of assets and the use of blockchain. We see this pace of change accelerating. If you have any feedback or questions, we would love to hear from you.