Through the Economic Crime (Transparency and Enforcement) Act 2022, the Register of Overseas Entities (ROE) came into force in the UK on 1 August 2022.
Here’s what it means for you and your business – and an upcoming deadline to be complied with.
What is the Register of Overseas Entities?
If an overseas entity wants to buy, sell, or transfer property or land in the UK, they must register with Companies House and disclose who their registrable beneficial owners or managing officers are. This also applies retrospectively to overseas entities who bought property or land on or after 1 January 1999 in England and Wales and on or after 8 December 2014 in Scotland. These overseas entities will need to register with Companies House and disclose their registrable beneficial owners or managing officers by 31 January 2023.
What is an Overseas Entity?
This is a legal entity, such as a company or other organisation, that has legal personality and is governed by the law of a country or territory outside the UK – note that The Republic of Ireland is an overseas jurisdiction for this purpose.
Who needs to be registered?
Either the registrable beneficial owners or managing officers of an overseas entity need to be registered.
What is a registerable beneficial owner?
This is any individual person, legal entity, a government or public authority, a trustee of a trust or a member of a firm that that is not a legal person under its governing law that has ‘significant influence or control’ over the overseas entity.
The threshold for ‘significant influence or control’ is met by any of the following conditions being satisfied:
- Holding, directly or indirectly, more than 25% of the shares in the overseas entity
- Holding, directly or indirectly, more than 25% of the voting rights in the overseas entity
- Holding the right, directly or indirectly, to appoint or remove a majority of the board of directors of the overseas entity
- Having the right to exercise, or actually exercise, significant influence or control over the overseas entity.
Although not defined in the legislation, this could include any director, manager or secretary of the overseas entity. Information relating to managing officers need only be disclosed when it has been ascertained that the overseas entity either has no beneficial owners or has been unable to fully identify them during the application process.
What happens when the overseas entity has registered with Companies House?
After registering, the overseas entity will get a unique Overseas Entity ID which it will need to give to the Land Registry when it buys, sells, transfers, leases or charges UK property or land.
What are the penalties for non-registration?
If, by 31 January 2023, an overseas entity required to register cannot demonstrate that it has a pending application for registration or that it is exempt, the entity and every officer of the entity commits an offence.
Persons found guilty of an offence may be liable to a fine, imprisonment or both and the penalties for the offence are different between England and Wales and in Scotland.