The Register of Overseas Entities (ROE) at Companies House was introduced by the UK Government to combat foreign criminals using property in the UK to launder money. The intention behind it was to establish increased transparency around property ownership.
Most overseas entities (OEs) owning UK registered land were required to register on the ROE by 31 January 2023. OEs acquiring UK land for the first time must ensure that they are registered on the ROE by the time they come to apply to HM Land Registry to register their acquisition.
Duty on overseas entities to update their registration at Companies House
Registration on the ROE is, unfortunately, not the end of the matter. The legislation also imposes a duty on registered OEs to keep the information on the ROE up to date. Failure to do so will result in the commission of a criminal offence by the OE (and potentially by its officers).It will also have the effect of making it impossible for the OE to comply with the terms of the restriction on any registered title to land owned by the OE until it provides the necessary ROE update. The practical effect is that failing to update the ROE will prevent the OE from disposing of its land until the updating duty is complied with.
How often must information on the register be updated?
The legislation contains the concept of an "update period" being:
- the period of 12 months beginning with the date of the OEs registration on the ROE; or
- each period of 12 months beginning with the day after the end of the previous update period.
The update period should be apparent from the face of the ROE on the Companies House website.
The registered OE must file the required information with the registrar within 14 days after each update period. After this, its filing will be considered late, which is a criminal offence. Even if the deadline is missed, the OE must still file the update as soon as possible.
The OE may shorten the update period to bring the register up to date earlier than would otherwise be the case if there are changes in the information filed on the ROE. They can do this by notifying the Registrar of Companies and delivering the required information to the registrar within 14 days of the new update period. An OE may choose to do this, e.g. to align all the update periods within a corporate group, or to align the update period with another compliance period for that entity (e.g. a tax or accounting period). The combined effect of these provisions is that a registered OE must update the information on the ROE at least once every 12 months on a rolling basis, even if nothing has changed, although it may provide more frequent updates if it wishes.
What does the updating duty comprise?
A registered OE will be asked to review all the information on the register about the OE and its beneficial owners or managing officers and either re-confirm certain information, and / or update any information that may have changed (for example, any additions or deletions to beneficial owners or managing officers).
All the information must relate to the state of affairs as at the end of the update period. OEs will also need to disclose anyone who became, and ceased to be, a registrable beneficial owner during the update period.
To be able to give a statement that nothing has changed or update the information held on the ROE, the OE will need to go through the same process to identify its registrable beneficial owners as it would have done when it first applied for registration. This means serving an information notice to any person it knows or has reasonable cause to believe, is a registrable beneficial owner. A recipient of this notice has one month to comply, so this time must be factored in to the time needed to prepare the updated statement.
Any updates to the information originally provided will need to be verified in the same way the information provided as part of the original registration was verified. The verifier who assisted the OE with its original registration is likely best placed to assist them with their updating obligation, but time for verification needs to be built in when the update becomes due. If everything has stayed the same, no additional verification will be needed, although an update will still need to be filed.
How does an OE update?
For the most part, updates can be filed online. Registered OEs will need their authentication code when filing – this confirms that the person filing is authorised to do so.
The main exceptions to online filing are where there are any trusts involved, or where beneficial owners or managing officers have their personal information protected at Companies House. In these instances, the update can only be filed via a paper form.
Reminders from Companies House
Registered OEs should have been told about the updating requirement in their registration confirmation email. Companies House has said that it will also send an email reminder to the email address it has on record for each entity.
However, an OE may want to check the register to see when it became registered and set a reminder when the first annual update is due (assuming that the update period has not been brought forward).
What if an OE has already disposed of all its UK land?
A registered OE should not assume it does not need to update its registration on the ROE just because it has disposed of its UK land.
Due to the "registration gap" (which is the period between the date of completion of a transaction and the date on which the Land Registry completes the registration of the buyer as the new registered owner of land), the OE remains the registered proprietor until HM Land Registry processes the buyer's application. Until this occurs, the OE cannot apply for removal from the ROE and will commit a criminal offence if it does not register its update at Companies House on time.
Unfortunately, as it has sold the property, the OE will not usually be notified by the Land Registry when registration of the buyer's application completes, meaning there is no direct visibility of the outcome of the buyer's application. Please contact your usual Gowling real estate contact if you need assistance to monitor the registration progress of properties that have been sold.
If an OE is sure that it has disposed of its UK land and all registration applications have been completed, it is open to the OE to apply for removal from the ROE, which will (once the removal has been completed) avoid the ongoing duty to update the ROE.
Enforcement for breach of the ROE regime
Companies House has recently published guidance on its approach to enforcement. In addition to existing restrictions on selling, leasing or raising charges on land, these include:
- Referring OEs to the Insolvency Service and other law enforcement agencies for prosecution.
- Imposing civil financial penalties on OEs.
Companies House has stated its intention to start issuing such penalties to OEs that have not registered and / or have not complied with their duty to update the ROE.
Every officer in the registered OE commits an offence in the case of continued contravention, regardless of their role in the initial offence, so it is critical to ensure that the deadlines are complied with.
For more information on the register of overseas entities, the ongoing duty to update the register and how it may affect your transactions, contact Michael Twining, Robin Creek or Olivia Hookings.