As of 1 August 2022, the Register of Overseas Entities (ROE) has been operational under the Economic Crime (Transparency and Enforcement) Act 2022 (ECTEA) for over a year.
This initiative aims to combat global economic crime by enhancing transparency regarding the ownership of overseas entities (OEs) holding property in the UK. The ECTEA mandates that OEs owning a ‘qualifying estate’ in England and Wales must register with Companies House, disclosing details about beneficial owners or managing officers, with some exceptions.
Failure to register not only imposes restrictions on an OE’s property transactions but also constitutes a criminal offense, leading to fines and, in extreme cases, imprisonment of the OE’s officers.
Upon registration on the ROE, Companies House issues the OE an overseas entity ID number, which must be provided to the Land Registry for any relevant transactions with UK property.
The government asserts that the ROE’s over 500,000 searches indicate increased transparency in UK property ownership.
Annual updating duty
Initial registration on the ROE doesn’t conclude an OE’s obligations.
Each registered OE is subject to an annual updating duty, requiring the filing of an update statement with Companies House to confirm the accuracy of the initially provided information, even in the absence of changes.
OEs must submit an update statement within 14 days of the 12-month anniversary of ROE registration, or within 14 days after subsequent annual periods.
For instance, if an OE registered on 1 January 2023, its update period extends from 1 January 2023 to 31 December 2023, with an update statement due by 14 January 2024.
Initial annual statements were due on 14 August 2023, marking 14 days after the ROE’s first anniversary.
To facilitate compliance, Companies House plans to send email reminders to OE email addresses about the annual update statement requirement, with OEs able to check their statement date through ROE searches.
What if an OE does not comply with the updating duty?
In the event of non-compliance with the updating duty, the OE’s registration on the ROE becomes invalid, rendering its Overseas Entity ID void. Companies House will annotate the OE’s public record to reflect this non-compliance.
Apart from the risk of committing a criminal offence, which may result in a financial penalty of up to £50,000, the OE faces practical consequences.
Its ability to engage in transactions related to its land or apply for the registration of new land at the Land Registry becomes restricted until the non-compliance situation is rectified.
Therefore, strict adherence to the updating duty deadline is imperative for OEs to avoid these repercussions.
What if an OE disposes of its UK property?
Regrettably, an OE is not exempted from its responsibility to fulfill the updating duty merely by disposing of all its UK property.
Even if an OE has divested itself of all UK property, it cannot seek removal from the ROE until the completion of the disposal registration process at the Land Registry.
All OEs, regardless of their status (including those awaiting Land Registry confirmation of UK property disposal), are obligated to adhere to the updating duty requirements while remaining listed on the ROE.
How will breaches be enforced?
In July 2023, Companies House released guidance outlining its enforcement strategy. The approach involves referring OEs to the Insolvency Service and other law enforcement agencies for potential prosecution, along with the imposition of civil financial penalties on OEs.
Companies House has communicated its intention to initiate penalty assessments for OEs failing to register on the ROE or violating their updating duty.
In cases of persistent non-compliance, every officer associated with the OE is deemed to commit an offence, irrespective of their involvement in the initial violation.
This underscores the critical importance of meeting all deadlines to avoid legal repercussions.
How Williamson & Croft can help
At Williamson & Croft, we are committed to assisting overseas entities in navigating the complexities of compliance with the Register of Overseas Entities regulations.
Our expert team is well-versed in the intricacies of the ECTEA and can provide comprehensive support to ensure timely and accurate registration on the ROE.
From initial registration to the annual updating duty, we offer tailored guidance to help OEs meet their obligations and mitigate the risk of penalties.
Our proactive approach aligns with Companies House guidelines, and we strive to keep our clients informed about deadlines, updates, and any regulatory changes.
If you need to make a submission to the register or complete an annual update, please get in touch with Williamson & Croft today.
We can remove the stress from ensuring your property is fully registered and up to date and ensure that you are compliant with the rules.