The new Register of Overseas Entities in the UK

What is the purpose of the new Register of Overseas Entities in the UK?

As off the 1^stAugust 2022, the government implemented new legislation, the Register of Overseas Entities (ROE), in an effort to tackle economic crime, prevent disguise ownership and enable companies and individuals to monitor their foreign deals with certainty.

The provision was made under the Economic Crime (Transparency and Enforcement) Act 2022 and calls for overseas entities to register their interest over land in the UK on Companies House, making their information available to the public. Registration must be carefully and accurately executed by the end of the transitional period and a failure to comply with the provision could incur a criminal offence.

Which companies need to register?

Overseas companies or organisations, those governed by any law other than UK law, that wish to transfer land in the UK must register. The provision also applies retrospectively and requires foreign companies that obtained land in England and Wales after 1^stJanuary 1999, in Scotland after 8^th December or in Northern Ireland after 5^thSeptember 2022, to comply and apply to register by the 1^stFebruary 2023 in order to transact with their UK property.

Overseas companies that sold UK land from the 28^thFebruary 2022 must also obey the provision. This is to prevent companies from escaping the scheme before it becomes effective.

What information must be included in the application?

The entity must provide information regarding any registrable beneficial owners. These are usually individuals or companies that possess 25% of either the shares or votes of the entity or have an influential control over the entity. In the event that it is not possible to identify any beneficial owners, Company House will request the managing officers’ information instead. Company Housing also requires overseas entity’s information. Further details, such as deed and title numbers, are necessary if the company has disposed of UK land post 28^th February 2022. This maintains transparency.

Necessary third party verification

In order to execute a successful application, a UK-regulated agent must verify the information of the beneficial owners and managing officers provided, within a 3-month bracket prior to the application. Companies House will also require the agent’s information.

The UK-regulated agent must be governed by the Money Laundering, Terrorist Financing and Transfer of Funds Regulation 2017 to offer valid verification. Successively, the agent must request an ‘agent assurance code’ from Company House to receive approval that the agent is qualified to offer their validation. This code is mandatory to proceed with the registration and applications for the code opened on 25^th July 2022.

What happens post registration?

Beneficial owners and managing officers will be registered on the ROE and the overseas entity’s information will be available to the public on Companies House. Thereafter, the registered overseas companies must update their information annually to maintain accuracy. Although the process seems like a tedious and lengthy obstacle course, it offers a higher level of transparency which tightens security across overseas investment, painting the UK as a hotspot for investment.

It is essential that offshore entities protect their existing and future interests in UK land by registering on Company House and avoid criminal charges.

Sources Links:

https://www.gov.uk/guidance/register-an-overseas-entity

https://commonslibrary.parliament.uk/the-register-of-overseas-entities-five-things-you-need-to-know/

https://www.lawsociety.org.uk/topics/property/register-of-overseas-entities-coming-into-force-on-1-august-how-property-lawyers-can-comply