The register of overseas entities (“ROE”) created by Part 1 Economic Crime (Transparency and Enforcement) Act 2022, came into force on 1 August 2022. The ROE is a new register, maintained by the registrar of companies in England and Wales. Overseas entities (“OE”) that hold existing property, or wish to buy, sell, grant a lease of 7 years or more or charge property in any part of the UK must register with Companies House and file the required information for the ROE.
The ROE application must include information in relation to:
- the beneficial owners of the OE; or
- (where there are no beneficial owners)the managing officers of the OE;
together with:
- certain prescribed information about the OE; and
- who the UK-regulated agent is who carried out the verification checks upon the OE.
Information about the OE
The following information must be provided for each OE:
- name;
- contact details (this might be the contact details of the agent);
- country of incorporation or formation;
- registered or principal address and service address;
- legal form of the entity;
- the law by which it is governed; and
- any public register it can be found on (including the registration number).
Registrable beneficial owners
The OE is required to take “reasonable steps” to identify all the beneficial owners. The definition of a “registrable beneficial owner” is complex, set out in statute and different to what you might expect from the natural meaning of the words. OEs should seek legal advice.
Reasonable steps
The OE must send an information notice to any person(s) it knows, or has reasonable cause to believe, is a registrable beneficial owner of the OE. This notice allows the person to confirm whether they are a registrable beneficial owner. The registrable beneficial owner must confirm the information contained in the information notice, and provide any additional information that the OE does not have. Additional information will also be needed where the beneficial owner is a trustee.
The person receiving the information request has up to one month to respond (beginning on the day the notice is given). Failure to respond is a criminal offence. OE must factor this time period into their application timeline as it could cause delays. Of course, responses can be received much quicker than that and, to avoid delays, immediate responses are best. There has been a misunderstanding within the market that OEs must wait one month to register: that is not correct. A registration cannot be made, however, until the information has been confirmed back to the OE.
Statement by the OE
An OE which must apply to be added to the ROE must make one of the following three statements, that:
- it has identified registrable beneficial owners of it and provided the required information; or
- it does not believe it has any registrable beneficial owners; or
- it believes it has a registrable beneficial owner but does not have the necessary information.
The OE must collect evidence to support its analysis. If there is no registrable beneficial owner or the OE does not have enough information to fully identify the beneficial owner(s), the OE must provide information in relation to its managing officers (commonly directors).
Additional information is required in certain very specific circumstances where a trust is involved and the beneficial owner (as defined for ROE purposes) is a trustee (this will include specific information about the trust).
Who can verify?
Before an ROE application can be made, the information must be verified by a UK-regulated agent (“Agent”). Agents include accountants and legal professionals supervised under the Money Laundering legislation (Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017) (as amended) (the “MLRs”) but not all relevant persons within that legislation.
An Agent must apply for an ‘agent assurance code’ from Companies House and be approved before it can apply to authenticate the verification statements made for the ROE.
In order to verify the information, it is necessary for the Agent to carry out an analysis of the facts against the ROE tests. Where it is uncertain who the beneficial owner is or if one exists, then advice may be required from the jurisdiction relevant to the OE. OEs must consider whether they need to engage local advisors before starting the ROE application in order to avoid delays and problems.
Please note that an Agent will need to verify the identity (and accuracy) of the beneficial owners, even where the OE decides to register and file the information itself.
Practical information required for the ROE application:
The application process can only be conducted online.
The OE (or its Agent) must:
- have a Companies House account;
- provide a name and email address of the person who can be contacted in relation to the ROE application;
- include the prescribed information about the OE (including beneficial owners or managing officers, as appropriate) as set out above;
- provide the assurance code of the Agent who conducted verification; and
- pay the ROE application fee of £100 to Companies House.
If the application is not made by the Agent the Agent will need to submit form OE VF01 containing the confirmation of its verification to Companies House.
What happens when the OE is verified?
Once the information has been verified, Companies House will issue an OE identification registration number (“OEID”) which is a number prefixed with OE , such as OE001234. The OEID is required for the OE to be registered at the Land Registry as the registered owner of property within the scope of the legislation. Property purchased by an OE in England and Wales before 1 January 1999 is beyond the scope of the regime.
The information relating to the OE and its beneficial owners will be available for the public to view on the Companies House search page. Whist the ROE is statutorily a distinct register, for a user it is entirely integrated within the Companies House search engine for companies and other registered legal entities.
How long does the ROE application take?
There is a statutory requirement for Companies House to deal with ROE applications within 7 days. From early experience, ROE applications are generally being completed by Companies House within 48 hours of submission (some as soon as 2 hours). However, prior to submission, the OE may need to spend time obtaining all of the required information. The early OE applicants made preparation in the months ahead of the ROE coming into effect.
Companies House will also send notice of its decision within 7 days. This will be sent to the applicant and the relevant individual or OE. Where the application has been unsuccessful, the OE will have 28 days from the date of the notice to appeal.
Ongoing requirements
An OR must update its ROE information annually. Changes within the year are not reportable, but on each anniversary of registration, the OE must reconfirm its registrable beneficial owners. The legal obligations therefore means that once each year the OE must refresh its ROE information. Further verification may be required.
What happens if the OE does not register on the ROE?
Where an OE, who was the registered owner of English or Welsh property before 1 August 2022, fails to register by 31 January 2023, the OE and its officers will have committed an offence and may be liable to a fine, imprisonment or both. Please note the regulation setting out the financial penalties for failure to comply has not yet been published.
Since 5 September 2022, an OE who seeks to acquire English or Welsh property (whether a freehold interest or a lease of 7 years or more) and then deal with it (such as a further sale, granting a lease charge or granting a lease of 7 years or more) must have an OEID. If the OE is not on the ROE it will have committed a criminal offence. The Land Registry will also refuse to register the OE as the owner of the Property at the Land Registry without the OEID.
There are other offences set out in the legislation, including false filing offences where a registrable beneficial owner has not registered their interest in the OE. It is also an offence to provide false or deceptive information to Companies House as part of an OE application.
Voluntary deregistration
When an OE no longer deals with land it can apply to Companies House to be removed from the ROE. Once Companies House has accepted an application, the OE is no longer required to update its beneficial ownership information but the OE will remain on the register for two years from the date of removal.
Key points
- Overseas entities that hold existing property acquired since 1 January 1999, or wish to buy, sell, lease (of 7 years) or charge property in the UK must register with Companies House.
- Details of the registrable beneficial owners will need to be made public.
- Registrable beneficial owners under ROE may not be the same as beneficial owners as defined within the MLRs.
- Wedlake Bell may be able to support OEs by acting as Agent.
Support
If you have any questions about the process, or need an analysis of a structure in order to determine registrable beneficial owners assistance with the ROE application, including the verification process, please do get in touch with Edward Craft and James French in our corporate team. Please note that Wedlake Bell is not able to conduct stand-alone verification services without being satisfied as to the accuracy of the whole of the ROE application.