From 1 August 2022 overseas entities owning property in the UK must register on a new register of overseas entities (ROE) maintained by Companies House and will need to keep that register up to date by filing annual updates.
Where the overseas entity already owns property in the UK, and it acquired that property after 1 January 1999 in England and Wales, after 8 December 2014 in Scotland, or after 5 September 2022 in Northern Ireland, it must submit an application to register before 1 February 2023. The overseas entity cannot transact with its UK property on or after 1 February 2023 until it is registered in the ROE.
Provision for the ROE is made under the Economic Crime (Transparency and Enforcement) Act 2022. An overseas entity which acquires property in the UK will need to be registered in the ROE before an application can be made to register the acquisition in any of the UK land registers on or after 5 September 2022.
Who has to register?
This applies to non-UK incorporated companies – even if the company is UK tax resident – and LLPs, as well as foreign foundations and non-UK partnerships that, under the laws of the country they are governed by, have a separate legal personality if they are registered as the proprietor of ‘a relevant interest’ in property in the UK.
What is a relevant interest in property?
In England and Wales, an entity is considered to have a relevant interest in property if it holds a freehold or a lease for more than seven years where acquired on or after 1 January 1999.
In Scotland, a relevant interest in property is ownership of property, a lease for more than 20 years, or an assignation of a lease for more than 20 years acquired on or after 8 December 2014.
In Northern Ireland, a relevant interest in property is a freehold or a lease of more than 21 years where the application to register the overseas entity as owner or tenant was made on or after 5 September 2022.
Being the registered proprietor of a charge or standard security does not bring an overseas entity within the regime.
Do exemptions apply?
The Act makes provision for regulations to be introduced to exempt some overseas entities from the regime. Currently, no regulations have been made for any exemptions.
What must the application to Companies House include?
The application must include one of the following statements:
- that the overseas entity has identified any registrable beneficial owners and provided the required information;
- the overseas entity does not believe that it has any registrable beneficial owners;
- the overseas entity believes that it has registrable beneficial owners but cannot provide the necessary information.
Before making the application to Companies House, the overseas entity must give one month’s notice to its beneficial owners. The definition of beneficial owners is quite complex but includes anyone who holds at least 25% of the shares or voting rights in the entity, or who exercises or has the right to exercise significant influence or control over the entity.
Failure to register and failure to update the register are criminal offences. This can result in fines of up to £2,500 per day or ultimately a prison sentence of up to 5 years.
Only some of the information registered on the ROE is accessible to the public. Some information about beneficial owners is exempt from inspection.
When do overseas entities have to have registered by?
If an overseas entity has property in the UK, then they must submit an application to register in the ROE before 1 February 2023. The application must include a statement that the entity has not made a relevant disposal of property since 28 February 2022 or must include details of any disposal which has been made.
An overseas entity which acquires property in the UK must be registered on the ROE before it can make an application to register the acquisition in any UK land register on or after 5 September 2022.
What happens when an overseas entity disposes of property in the UK?
The entity and its officers will commit a criminal offence if the entity delivers a qualifying registrable deed to a third party without being registered in the ROE.
The third-party purchaser, tenant or lender cannot register the deed in their favour without evidence that the overseas entity which owns the property is registered or the disposal falls into one of a limited number of exemptions.
How does an overseas entity register on the ROE?
To register on the ROE, the overseas entity needs to provide information about itself, any registrable beneficial owners and, in certain circumstances, about the managing officers of the overseas entity.
Before an application to register on the ROE can be made, an information notice must be sent to each registrable beneficial owner asking them to confirm that the information the applicant retains is correct and invite them to provide any information which is missing. The registrable beneficial owners have one month to reply to this notice.
The information submitted to Companies House must be independently verified by an individual or entity acting in the capacity of a UK regulated agent.
The steps overseas entities have to take to comply with these new ROE requirements will take time to implement, so entities affected are encouraged to gather the necessary information as soon as possible.
Get in touch
If you require further information about the Register of Overseas Entities or require our assistance with the registration process then please contact Mark Moore who will be happy to assist.
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