The Register of Overseas Entities (ROE) arrived on 1 August this year through the Economic Crime (Transparency and Enforcement) Act 2022 (Act).
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Secure PaymentRegistration of Overseas Entities – what you need to know and do • BBS Law
By Avi Barr (Partner) and Ellen Roberts (Associate) in the BBS Law Property and Secured Lending Team
The Act introduced the ROE to create transparency of who own properties in the UK to help prevent illicit activities by overseas companies. Although there are some limited exceptions, property holding non-UK SPVs will be caught by the regime.
Why does it matter?
In simple terms, as of 5 September 2022, the Land Registry is restricting registrations of land if an overseas entity is not on the Register of Overseas Entities. There is a second deadline of 31 January 2023, at which point all overseas entities need to have registered on the Register of Overseas Entities or they will face a fine of up to £2,500 per day and potential criminal charges.
Unless the registration process has been dealt with and the information up to date, it will no longer be possible for Overseas Entities to buy, charge, sell or lease property (for more than seven years).
If you are involved in any property transaction involving Overseas Entities you need to take appropriate action now to make sure that any registrations are completed.
What is the ROE?
The ROE is operated by Companies House, and it will be register information of overseas entities who own, will own property or are tenants of leases (for a term of over 7 years). The information held on the ROE will include most importantly the beneficial owners of the overseas entity or in the absence of such, the managing officers.
In order to register on the ROE, the Overseas Entity (OE) must have their information verified by a UK regulated ‘relevant person’ (as defined in the Money Laundering Regulations), this person can be a solicitor, accountant or registered agent. Once successfully registered, Companies House will provide an Overseas Entity ID Number which will be used by the Land Registry in property dealings.
Transactions affected and key dates
| Type of transaction | |
| Existing owners or tenants of property (property owned or leased which has been registered at the Land Registry since 1 January 1999) | OEs must register on the ROE by 31st January 2023. There are criminal sanctions for failure to comply. Requirement to disclose details of:any transfer, letting (for more than seven years) or charge of that estate made between 28 February 2022 and 31 January 2023 (both dates inclusive); andOE’s beneficial ownership immediately prior to the relevant disposition. |
| Overseas Entities disposing of a qualifying estate after 05 September 2022 but before 31 January 2023. | Although this type of disposition will not be restricted until 31 January 2023, the overseas entity is still required to register. It is likely buyers would want the registrations to be undertaken. |
| Acquisitions by Overseas Entities of a qualifying estate (a freehold estate in land or a leasehold estate in land granted for a term of more than seven years from the date of grant) | The OE must first register on the ROE. |
| Financing by Overseas Entities | Not restricted until 31 January 2023 although we are seeing lenders insist that the OE is registered prior to completing. |
What do you need to do to register with the ROE?
In order to register, an overseas entity needs to:
- identify registrable beneficial owners and serve notice on them;
- provide details of registrable beneficial owners to Companies House; and
- have all the information verified by certain UK-based agents supervised for money laundering purposes (including credit institutions, auditors and lawyers).
Part of the registration process is the need for the information submitted as part of an OE’s application to register at Companies House to be verified by a “relevant person.” Verification by someone such as a lawyer, accountant or regulated company service provider is required:
- upon initial registration of the overseas entity;
- before each required annual update to Companies House; and
- before any application to remove an overseas entity from the register can be made.
You can find out more details about the registration process on the Government’s website- www.gov.uk/guidance/register-an-overseas-entity.
Following registration, the information must be kept up to date. Every 12 months (beginning with the date of the overseas entity’s registration), the overseas entity must either confirm that there has been no change in the beneficial owners during that period, or provide information about anyone who has either become, or ceased to be, a registrable beneficial owner during that period.
Compliance with the duty to update is a condition of being able to dispose of land assets so this will be an ongoing compliance requirement for overseas entities which are active in UK land assets.
In some cases, consideration will also need to be given to whether any trust arrangement in the structure needs separate registration with the HM Revenue & Customs (HMRC) Trust Registration Service (TRS) following the recent expansion of the requirement to register taxable trusts to cover a much wider range of non-taxable trusts. You can find further information on the Government’s website – www.gov.uk/guidance/register-a-trust-as-a-trustee.
If you would like any further information please do not hesitate to contact a member of the Property or Secured Lending team. Avi and Ellen can initially be contacted by email (abarr@bbslaw.co.uk / eroberts@bbslaw.co.uk) or by phone on 0204 505 8080.
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