The Register of Overseas Entities has now gone live: what do you need to do?

If you own shares in an overseas entity that owns UK property/land, the Register of Overseas Entities (RoE) applies to you. Following our update in May, the Register went live on 1 August. The purpose of the RoE is to record information regarding beneficial owners of overseas entities which own UK property/land, providing greater transparency.

Consequences of non-compliance

As a general rule, you will need to register with Companies House by 31 January 2023. Failure to comply with the RoE could result in a fine of up to £2,500 per a day and/or a prison sentence of up to five years. There will also be restrictions on the overseas entity to either buy, sell, transfer, lease or place a charge over the property/land within the UK. Clearly the punishments are severe and the requirements to register should not be taken lightly.

Compliance deadlines

The core details

Any overseas entity that owns UK property/land will need to register on the RoE, provided they meet certain conditions.

Overseas entities should receive a letter from Companies House regarding the requirement to register on the RoE by 31 January 2023. However, if this letter is not received, this does not absolve the overseas entity of the requirement to register.

If an overseas entity has disposed of property/land within the UK between 28 February 2022 and 1 September 2022, a paper form will need to be completed and emailed to Companies House. These rules apply even if the property has since or in the process of being sold or the overseas entity has been liquidated since ownership.

Who does this apply to?

For a beneficial owner to be registerable on the RoE, they would need to own more than 25% of the shares in the overseas entity. Beneficial owners for the purposes of the RoE may not always be an individual, but may include Government and Public Authorities or other legal entities. Additionally, should a shareholder own 25% or less of the shares, but has a right to exercise or actually does exercise significant control or influence over the overseas entity or has a direct or indirect right to appoint/remove directors, then they will need to register on the RoE as a beneficial owner.

If the overseas entity does not have any beneficial owners that own more than 25% of the shares, then the overseas entity must provide details of the managing officers on the RoE instead. Should a beneficial owner later be found to be exerting significant control or influence, have a right to appoint/remove directors, or they were in fact a registerable beneficial owner, criminal sanctions may be imposed for committing a false filing offence.

The mechanics

Before registration can even take place, reasonable steps must be taken to identify any and all registrable beneficial owners. To do this, an information notice must be provided to the people that the overseas entity knows or believes to be a registerable beneficial owner (including those that can or do exercise significant control or influence over the overseas entity or a direct or indirect right to appoint/remove directors). The registerable beneficial owner will then need to respond confirming whether they believe that they meet the requirements of being a registerable beneficial owner and provide the information required to be included on the RoE. This information includes their full name, their share ownership as a percentage, a certified copy of their passport and a certified copy of their proof of address dated within the last 3 months.

An overseas entity may decide to send a secondary information notice to all other shareholders to inform them of the new requirements. The information notice must be complied with within one month of the information notice being sent. Should a false statement be provided or the information notice go unanswered, this would amount to a criminal offence.

Before the overseas entity can then be registered, the registerable beneficial owners (or the managing officer) must have their information verified. Verification is a much more rigorous process than providing client due diligence. The “verification process” must be carried out by a “relevant person”. A relevant person includes:

• Credit institutions and financial institutions;
• Auditors, insolvency practitioners, external accountants and tax advisors;
• Independent legal professionals (in-house solicitors will not be able to complete verification if they act on behalf of the overseas entity which employs them);
• Trust or company service providers; or
• Estate agents and letting agents.

Verification must be completed no more than 3 months before registration on the RoE takes place. Should this be longer, verification will need to take place once again. Ideally, the person completing the verification would meet with the registerable beneficial owners in person to confirm their identity documents. However, where this is not possible verification should take place via a secure video call with the registerable beneficial owner. The verifier will then securely keep all the verified documents on file for a minimum of five years under regulation 8(2) of 2022/725 regulations.

There is annual requirement to update the verification process and RoE.

Once verification is complete, the verifier will also need to submit a statement confirming they have completed the verification of the relevant information of the registerable beneficial owner and that they have complied with their requirements set out in the regulations of the Economic Crime (Transparency and Enforcement) Act 2022.

Once verification is complete, the registration process can take place and an online form can be submitted to Companies House. This can either be done directly by the overseas entity or by the verifier. If it is the overseas entity submitting the information, the verifier will also need to submit the statement within 14 days of the application.

There is a £100 fee to complete the registration with Companies House. The fee may only be paid either by debit or credit card (but this may change in the future so that bank details are be provided).

Once registration is complete and all the necessary information has been provided, Companies House will review the application and supporting verified documents. Provided that they accept the registration, an overseas entity ID number will be issued. It is important that this overseas entity ID number is kept somewhere safe as this will need to be provided to the Land Registry. This will also need to be supplied when buying, leasing, transferring or registering charges against the property/land.

Should the overseas entity try to either buy, lease, transfer or register charges against the property/land but be non-compliant, whilst holding an overseas entity ID, the Land Registry will reject the application. An overseas entity may be non-compliant where they fail to update the verification process and RoE an annual basis.

The RoE can be accessed by the public. However, certain information will be redacted, including addresses and dates of birth of registerable beneficial owners.

An overseas entity can be removed once it has been registered. This may be relevant where it is no longer the registered owner of UK property/land. From 1 September, an overseas entity wishing to purchase UK property/land will need to have an overseas entity ID number. Therefore, an application to the RoE will need to made before the purchase takes place. Once the purchase takes place, the overseas entity ID number will need to be supplied and registered at the Land Registry.

What do you need to do now?

Overseas entities should now send information notices to those that they know to be or believe to be registerable beneficial owners, informing them of the requirement to register on the RoE. Responses should be received within one month of the information notices being issued, or a criminal offence will have been committed.

Overseas entities should check whether they own any UK property/land and also check the date of any previous disposals. Any property/land disposed from 28 February 2022 will be caught and therefore the overseas entity will need to register on the RoE. This is the case even if the overseas entity no longer owns any UK property/land.

Overseas entities planning to purchase UK property/land should register on the RoE and obtain an overseas Id number before the purchase completes (effective from 1 September). The overseas entity ID number will need to be supplied to the Land Registry to complete the purchase. Failure to do so may result in an abortive purchase.

Overseas entities should source a relevant person to complete the verification process.

Once registered, the overseas entity should keep their overseas entity ID number somewhere safe.

There is an ongoing obligation to update the RoE and complete the verification process on an annual basis.

The deadline for compliance is 31 January 2023.

If you need help with any or all of the above or have any questions, please contact Patrick Wooddisse or Sarah Rust.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at August 2022. Specific advice should be sought for specific cases. For more information see our terms & conditions.