The Companies House Register of Overseas Entities (ROE) has been operational for a year.
Since the register was launched, more than 28,000 overseas entities have been registered. JTC (UK) Limited has successfully acted as Verification Agent to analyse, verify and register information for a number of overseas entities.
Part 1. New registrations (post-transition period)
On 15 March 2022, the UK Government enacted The Economic Crime (Transparency and Enforcement) Act 2022 (the Act). The intention of the Act was to create a public register identifying the beneficial owners of overseas entities owning UK property. This had been an openly-stated, political objective for around five years. However, it took the conflict between Russia and Ukraine, and the need to scrutinise property ownership and transfers by sanctioned individuals, to accelerate this objective to the top of the political agenda. The legislation was rushed through the entire Parliamentary process in a little over a fortnight.
The Act introduced a Register of Overseas Entities (‘ROE’), publicly available and searchable free of charge – see GOV.UK. The ROE is maintained by Companies House and contains details of overseas entities which own UK property and their beneficial owners.
The Act provided for a transition period, from 1 August 2022 to 31 January 2023, during which time overseas entities which already owned UK property were obliged to register. The criteria for registration during the transition period were that the overseas entity:
- owns a qualifying estate and was registered as proprietor at the Land Registry in England and Wales further to an application made on or after 1 January 1999 (8 December 2014 in Scotland and 5 September 2022 in Northern Ireland);
- wishes to acquire a qualifying estate;
- wishes to make certain dispositions of a qualifying estate (a transfer, the grant of a charge, the grant of a lease for more than 7 years in England and Wales, more than 20 years in Scotland and more than 21 years in Northern Ireland); or
- had disposed of property since 28 February 2022.
With the transition period now closed, every overseas entity with a qualifying interest in UK property must now register (or be registered) with Companies House and provide information on its registrable beneficial owners.
What is an overseas entity?
An overseas entity means a legal entity that is governed by the law of a country or territory outside the United Kingdom. A ‘legal entity’ is defined as meaning a body corporate, partnership or other entity that is a legal person under the law by which it is governed. As such, whilst a Scottish limited partnership is deemed to be a ‘legal entity’, an English limited partnership is not.
Who is the beneficial owner?
A registrable beneficial owner of an overseas entity is an individual, government, public authority or other legal entity who:
- holds directly or indirectly more than 25% of the shares of the overseas entity; or
- holds directly or indirectly more than 25% of the voting rights of the overseas entity; or
- holds directly or indirectly the right to appoint or remove a majority of the board of directors of the overseas entity; or
- has the right to exercise or actually exercise significant influence or control over the overseas entity.
Upon identifying its beneficial owners, an overseas entity must send them an information notice and obtain their approval to be published on the public ROE register.
Where an overseas entity cannot identify all or any of its beneficial owners, it should disclose its managing officers in the ROE.
All required information forming the basis of the application for registration must be verified by an approved agent. Only agents who are UK-based and supervised under the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017 can conduct verification checks. JTC (UK) Limited has been approved by Companies House to act as an ROE Verification Agent (VA).
Part 2. Annual update statement and on-going duty.
August 2023 marks the first anniversary of the launch of the Register of Overseas Entities at Companies House under the Economic Crime (Transparency and Enforcement) Act 2022.
In order for an overseas entity owning UK property to retain a valid overseas entity ID number and comply with UK law, the overseas entity is required to submit an annual update statement which must be filed to Companies House confirming that the information held on the ROE register is up-to-date. This annual update statement is required to be submitted irrespective whether or not any changes to overseas entity and its structure have been made.
What are the timings?
The annual update statement must be filed on or before the anniversary of the date that the overseas entity was first registered on the ROE, or within a year of the last update statement. There is a 14 days grace period from this anniversary date.
An overseas entity may choose to make an early update, which appears to have an effect of ‘resetting’ the anniversary date for the next annual update statement filing.
Companies House are sending email reminders about the legal requirement to file an upcoming annual update statement to the email address they hold on record for each entity to encourage compliance and awareness of an on-going duty.
Key considerations when filing the annual update statement
There are various elements that need to be considered when preparing and filing an annual update statement.
- Any changes made to the annual update statement – for example, adding a new beneficial owner, a change of registered office address – must be verified by a UK-regulated agent, such as JTC (UK) Limited, prior submission to Companies House;
- For most entities it is possible to file an update statement online using an authentication code. However, where trusts are involved, or if there are any changes, the update statement must be filed using a paper form OE02.
- There is a £120 fee payable to Companies House for each annual update registration regardless of whether there have been any changes to the overseas entity or its beneficial owners.
Failure to file an annual update
There are a number of consequences flowing from a failure to file the annual update statement:
- A criminal offence will be committed which could lead to prosecution of the entity’s officers (directors, company secretary etc) or a civil financial penalty may be imposed (a fixed penalty or a daily rate penalty or both). For more information on the possible sanctions see Register of Overseas Entities: approach to enforcement – GOV.UK (www.gov.uk)
- The overseas entity ID will become invalid until the record is updated. An overseas entity must have an overseas entity ID number to prevent title restrictions being imposed by HM Land Registry on the ability to transact.
- A note confirming non-compliance will be placed on the public record.
How JTC can support your ROE requirements
As an approved Verification Agent, JTC (UK) Limited has assisted multiple clients in navigating the ROE framework and new recent developments in the legislation which came into force on 1 August 2023.
We are able to conduct the verification and the new registration of the overseas entity (post-transition period) and, as required, submission of annual updates.
JTC (UK) Limited has a secure process for the transfer and gathering of the required information, allowing them to perform verification checks and the registration of the overseas entity in an efficient manner.
Our role is to ensure that clients adhere to increasingly complex rules and regulations. Our qualified professionals with in-depth knowledge of the latest regulatory developments, adoption of the Act and a good relationship with Companies House enables us to have enhanced efficiency in systems and processes to help our clients with both new registrations and ongoing filings.