What is it?
On 1st August 2022, the new Register of Overseas Entities (ROE) came into force via the Economic Crime (Transparency and Enforcement) Act 2022. This creates a legal requirement for foreign owners of UK land to be registered centrally, with the aim of increasing transparency making it considerably more difficult to launder money through UK land. Those who are the beneficial owners of overseas entities must now be identified, and the information then verified prior to application.
Who is it for?
The legislation defines an Overseas Entity as “a legal entity that is governed by the law of a country or territory outside the United Kingdom” and “a body corporate, partnership or other entity that (in each case) is a legal person under the law by which it is governed”.
An Overseas Entity is within the scope of the legislation if it owns land purchased on or after 1st January 1999 in England & Wales; on or after 8th December 2014 in Scotland and/or on or after 1st August 2022 in Northern Ireland.
How does it work?
There are two groups covered by the legislation, those who already own land in the UK and those who are purchasing land in the UK. During the registration process, entities are required to disclose information about their beneficial owners and/or managing officers to Companies House. This must be updated annually.
Overseas entities that already hold one or more qualifying estate(s) will have six months from 1st August 2022 to register details of their beneficial owners and information on their managing officers and any superior trust(s). Registrations under this category must be completed on or before 31st January 2023.
Failure to register by this date is a criminal offence.
Overseas entities that are buying land in the UK must register the beneficial owners on the ROE before they can apply to HM Land Registry to become the registered owners. The land registration elements of the act came into force 5th September 2022.
Failure to register could be a criminal offence.
Where there are no registrable beneficial owners, the entity must then look at its managing officers and provide their details.
Where no registration has been made and a beneficial owner is later found to be exerting significant influence or control, there may be criminal sanctions imposed.
What should I do next?
If you represent an Overseas entity that owns or will be purchasing land in the UK, you must now take reasonable steps to identify the beneficial owners of that entity. These may be individuals, a Government or public authority or another legal entity (e.g. body corporate). They will be deemed as a beneficial owner if they meet one or more of:
- 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 of the overseas entity.
- Holding the right, directly or indirectly, to appoint or remove the majority of the board of directors of the overseas entity.
- Having the right to exercise, or actually exercising, significant influence or control over the overseas entity.
- Being a trustee of a trust, member of a partnership, unincorporated association or other entity that fulfils one or more of the above conditions.
- Having the right to exercise, or actually exercising, significant influence or control over the activities of that trust or entity.
Overseas Entities not only have to identify their beneficial owners and provide information. That information must also then be verified by “relevant persons”.
If you believe you may need to make a declaration to the register, you should consult with a solicitor as they will need to conduct verification of the information being registered.
For more information about the requirements on identifying beneficial owners and verification; and for guidance on what steps must be taken prior to application to Companies House, please see the Government’s guidance document.
If you have any queries regarding the above or have any other questions, please do not hesitate to contact Charlotte Leslie on 01865 261119 or email.
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