Economic Crime (Transparency and Enforcement) Act 2022.
Following the introduction of the Economic Crime (Transparency and Enforcement) Act 2022, which attained Royal Assent in March 2022, the Register of Overseas Entities (ROE) came into force on 1 August 2022 in the UK.
Its purpose is to provide transparency on overseas entities which own land in the UK by creating a publicly available register (Register) detailing information of its beneficial owners and / or managing officers, to be maintained by Companies House.
Who is required?
Any overseas (non-UK) legal entity which currently holds real estate in the UK (acquired in England and Wales after 1 January 1999) or disposed of a real estate asset since 28 February 2022, will have to submit an application to Companies House to be included on the Register.
Any overseas legal entity that has a lease granted for a term of over seven years falls within the ‘owned’ definition and therefore will also need to register.
What is required for registration?
Information on beneficial owners of entities, either legal entities and/or individuals if they:
- Own 25% directly or indirectly of the shares.
- Have 25% voting rights of the entity.
- Have the ability to significantly influence or control (i.e could remove board members).
Legal entities will be required to provide information on jurisdiction of establishment, registered office and correspondence address, legal form and registration number in that jurisdiction. Individuals will be required to input personal details.
Following successful registration, Companies House will provide an Overseas Entity ID to provide to the Land Registry on submission of an acquisition, disposal or charge over property in the UK.
When is the registration deadline?
Overseas entities that currently hold UK real estate have until 31 January 2023 to complete the registration.
From 5 September 2022, the regime will come into immediate effect for those overseas legal entities intending to imminently acquire a property in the UK, and they should register as soon as possible to avoid delays.
For the first annual confirmation, the legal entity will be required to confirm there have been no changes since the initial registration and, going forward, on each anniversary, a confirmation within 14 days that there are no changes.
If there are changes to reportable entities/managing officer, the dates and details of each change will be required to be provided as well as any entities/managing officer that are no longer reportable under the regime.
Failure to comply
Since the introduction earlier this month, Altum are already seeing this registration become a condition precedent in transactions by buyers, sellers and third party lenders on financings on UK real estate. Failure to comply, as well as being a criminal offence, will affect the ability of the legal entity to either acquire, dispose or create a charge over the real estate.