On 1 August 2022, much of Part 1 of the Economic Crime (Transparency and Enforcement) Act 2022 (the Act) came into force relating to the new Register of Overseas Entities (ROE) at Companies House.
Please note that equivalent changes apply to Scotland and Northern Ireland but we do not cover them here.
|1 January 1999||Where an overseas entity is already the registered proprietor of a “qualifying estate” (i.e., leases over seven years, charges or transfers of registered leaseholds or freeholds) or became the registered proprietor on or after this date, it will be captured by the provisions of the Act.|
|28 February 2022||Any overseas entity that has disposed of a “qualifying estate” on or after this date, but prior to the expiry of the transitional period (see below), will be required to disclose certain beneficial ownership information to the registrar.|
|1 August 2022||The ROE opened at Companies House and marks the beginning of the six-month transitional period.|
|5 September 2022||From this date, the Land Registry will not accept an application to register an overseas entity as the registered owner of a “qualifying estate”, unless the overseas entity is a registered overseas entity or where one of a limited number of exceptions applies.|
|31 January 2023||End of the transitional period – any overseas entity still owning a “qualifying estate” on this date must have applied to be registered on the ROE.|
The ROE will contain details of the beneficial owners of overseas entities that own a “qualifying estate”.
In determining who is a beneficial owner, it’s very similar to the People with Significant Control (PSC) regime for UK companies. The Act makes provision for there to be “exempt overseas entities” which are entities that the Secretary of State may specify in regulations. No such regulations have yet been made.
The Act sets out information that needs to be provided by an overseas entity for registration and further guidance on the requirements can be found at Companies House online. On registration, they will be allocated an overseas entity ID (OE ID) that is recorded on the ROE.
The overseas entity will have to deliver updated information annually, or confirm that the information on the ROE is up to date.
Failure to comply with the requirements is a criminal offence, committed by both the entity and every officer who is in default. The maximum sentence is an initial fine and a daily default fine of £2,500.
Before an overseas entity can register its beneficial owners or managing officers on the ROE, a UK supervised ‘relevant person’ will need to verify the required information about them. These verification checks must be carried out by a UK-based agent who is supervised under the Money Laundering Regulations. These are:
Companies House expect supervised agents to register on the overseas entity’s behalf, as well as verify the required information about their beneficial owners or managing officers and warn that the registration may take longer to process if the overseas entity completes the registration themselves.
Supervised agents will need to apply to Companies House for an Agent Assurance Code before they can file any verification statements on the overseas entity’s behalf.
We do not currently provide a ROE verification service but can assist you with appointing an agent if required.
Overseas entities that currently own a registered qualifying estate in England and Wales must have either:
before the end of the transitional period (i.e., by 31 January 2023).
From 5 September 2022, the Land Registry will start adding restrictions to all registered qualifying estates where the overseas entity became the registered proprietor pursuant to an application made on or after 1 January 1999.
The following restriction will be entered:
“After 31 January 2023 no disposition within section 27(2)(a), (b)(i) or (f) of the Land Registration Act 2002 is to be completed by registration unless one of the provisions in paragraph 3(2)(a)-(f) of Schedule 4A to that Act applies“.
The OE ID must be valid at the time of the relevant application to HM Land Registry. If a valid OE ID is not provided for the overseas entity, the application will be rejected, unless one of a limited number of exceptions applies:
As a result, failure to comply with the obligations will result in such entities no longer being able to deal freely with their properties.
Any overseas entity which disposes of all of its qualifying property prior to the end of the transitional period does not need to apply for registration to the ROE but will still be required to disclose certain beneficial ownership information to the registrar before the end of the transitional period. This is the case even if the overseas entity no longer owns any qualifying estate in England and Wales at the end of the transitional period.
If an overseas entity disposes of qualifying property on or before 31 January 2023, the Land Registry restriction will not operate. If the transaction completes after the transitional period, the overseas entity must have an OE ID, otherwise the Land Registry will not register the disposition unless one of the exceptions applies.