UK Register of Overseas Entities

The UK has introduced, by virtue of the Economic Crime (Transparency and Enforcement) Act 2022, The Register of Overseas Entities (ROE).

The Act, and the Register, is the UK Government’s response to combat use of land for criminal purposes, and to increase transparency and public trust in overseas entities owning land in the UK. The register itself will monitor and accurately account for all beneficial owners of UK lands and real estate. The ROE will require all overseas entity owners of property to register and disclose information for property transactions including purchase and sale of lands.

The new Register of Overseas Entities went live on 1 August 2022 and stipulates those overseas entities that owned lands within England and Wales, Northern Ireland, and Scotland will need to have registered in Companies House on the ROE by 31 January 2023.

Upon registry each entity will be given an exclusive Overseas Entity ID Number that will mandatorily be applied for all documents submitted to the appropriate land registries for all land transactions. The unique identifier will be used for purchases and sales, as well as leases and transfers, and will be required for any future buyers wishing to register title deeds.

Details

The Register of Overseas Entities (“ROE”) launched this month for registrations, and will thus effect all foreign entities that own UK property. The relevant “Entities” include corporate, partnership, and other legal structures governed by the laws of a country outside of the UK. Apart from registering the entity, it will also be required to stipulate details of those entities’ management and ownership, as well as any potential other entities that exercise influence or control over those companies. Existing holdings and any holdings that have been sold after 28 February 2022 must be registered by 31 January 2023. The Land Registry will restrict the title of any relevant overseas entities that own property to prevent any disposition of that property (i.e., sale, grant of a long lease or grant of a legal charge) unless the overseas entity is registered.

The Act provides for two launch dates, a transition period and retrospective dates, as follows;

• 1 August 2022: Launch of the ROE with Companies House accepting registrations.
• 5 September 2022: Launch of land registry requirements for new owners.
• 1 August 2022 to 31 January 2023: Transition period for existing owners.
• 1 January 1999 and 28 February 2022: Retrospective dates for existing and former owners.

The register creates three primary areas of obligation:

• Overseas entities that acquire UK land and property after 5 September 2022 must register with UK Companies House prior to completing the acquisition.
• Overseas entities that currently hold land or property in England or Wales purchased on or after 1 January 1999 — or hold land in Scotland purchased on or after 8 December 2014 — must register the relevant information with UK Companies House. Entities have until 31 January 2023 to register.
• Overseas entities that disposed of UK property between 28 February 2022 and 31 January 2023 must give disposal details. (The Russia-Ukraine conflict commenced on 28 February, which accounts for the start date here.)

Penalties

Penalties for noncompliance (registration and updating) with the ROE registry include criminal and civil sanctions on managing members of these entities, along with prison sentences of up to five years. Other penalties include fines of up to £2,500 per day along with restrictions when buying, selling, transferring, leasing, or charging property in the UK.

The key points are:

• Information about individual beneficial owners needs to be submitted including name, date of birth, nationality, residential address, nature of control of the entity, service address, date of which the individual became UBO and whether the individual is on sanction lists
• After a 6-month transitional period, no overseas entity can obtain legal title to a property (i.e., have its ownership registered at the Land Registry) unless they have registered.
• There is a requirement to provide an annual update on the entity and its beneficial owners and managing officers annually or confirm that there have been no changes.

To reinforce the UK Government’s commitment to ensuring compliance with international sanctions, the combatting of money laundering and terrorist financing, failure to comply is a criminal offense carrying heavy penalties (mentioned above). There will be a detailed verification process by a separate UK regulations agent to make sure entities comply.

However, it is important to note that some exemptions may be applicable on a case-to-case basis, as well as various degrees of information required depending on the company structure- trusts and nominee shareholdings would register differently than an LLC.

Next Steps

Review current ownership structure in order to determine if:

• there are any alternative ownership structures that could benefit the UBO
• if required, comply and register with the ROE registration

Please contact us should you wish to discuss any of the requirements or more generally, further investment and structuring. We assist our clients in making the necessary filing requirements and would also be happy to talk you through different structures that could be used.