Jul 10

Rooks Rider Article: The Register of Overseas Entities (ROE) – Where are we now?

The Register of Overseas Entities (ROE) – Where are we now?

Life beyond the Deadline
The deadline passed on 31 January 2023 for the registration of overseas entities at Companies House, although applications can still be made and are being accepted.

Under the Rules introduced by the Economic Crime (Transparency and Enforcement) Act 2022 (the “Act”), overseas entities owning property or land in the UK had an obligation by 31 January 2023 to register and declare their beneficial owners. The term “overseas entity” has been given a wide definition in the Act and broadly means a legal entity that is governed by the law of a country or territory outside the UK. “Legal entity” means a body corporate, partnership or other entity.

More than 26,000 overseas entities have registered to date and an estimated 13,000 entities failed to register by the deadline. This represents approximately 40% of the total number of overseas entities owning UK land or property. The end result is that the general public can now access the relevant data on any registered entity through the Companies House website and it is understood there have already been more than 220,000 searches carried out. 75% of the registered entities are based in five jurisdictions: the BVI, Jersey, the Isle of Man, Guernsey and Luxembourg.

Those entities which have not yet registered are continuing to receive letters from Companies House reminding them of the consequences, set out below, if they do not comply. (There has already been an increase in the number of so-called nudge letters received from HMRC checking on UK tax issues relating to disposals of interests in UK properties owned by overseas entities).

What are the penalties imposed for non-compliance?
An existing overseas entity and its officers are committing an offence if they have not made an application to register but continue to own relevant interests in UK land beyond 31 January 2023. Any officer guilty of an offence is liable on summary conviction to a daily fine of up to £2,500 or a prison sentence of up to 5 years (or both). Failure to register will also restrict the overseas entity from carrying out any dealings with the real estate in question. This includes any selling, transferring, leasing or charging of the property or land.

Annual Updates
For those overseas entities already registered at Companies House they must now file an annual update one year after they were registered and for every year they remain registered. This will be used to inform Companies House about any changes to the information already held or confirm that the information held is still correct. It should be filed no later than 14 days after the due date. An earlier filing can also be made if any information needs to be updated which is likely to prove useful if an overseas entity is contemplating a disposal when an update is imminent. Overseas entities will be able to apply to be removed from the ROE once they have disposed of all their property interests in the UK.

Further Measures
Following its introduction the UK Government is now seeking to introduce further amendments to the Act. These are currently contained in the Economic Crime and Corporate Transparency Bill which will include the introduction of measures designed to prevent the abuse of personal information held on the Companies Register (such as a series of false statement offences in relation to information notices and the delivery of information). Other provisions are intended to resolve inconsistencies in the Register where they occur. The Bill is entering its final review stages in Parliament and is expected to come into force soon. In addition, the Bill also provides for several reforms to Companies House which will expand its role and give it greater powers to ensure the transparency of UK corporate entities.

How can we help?
If you remain uncertain about what you or your clients should do then Rooks Rider Solicitors LLP is able to help and continues to be available as a supervised agent to carry out verification checks on all beneficial owners and managing officers for any relevant overseas entities which need still to be registered. Annual updates can also be filed for those entities at Companies House.

Please contact Robert Drysdale, Karen Methold, Chris Cooke or James John for further details.