Applying for registration in the new Register of Overseas Entities

How does the new registration regime work?

In broad terms:

• Overseas entities that already own, or wish to own, a “qualifying estate” in land are required  to be registered in the ROE. A “qualifying estate” is a freehold interest or a leasehold interest for a term of more than seven years.
• While some overseas entities may be exempt from registration, at present no regulations have been made to define “exempt overseas entities”.
• Registration in the ROE involves the overseas entity providing to Companies House information about itself and its registrable beneficial owners or its managing officers. This information must be updated annually. Additional information must be disclosed where a registrable beneficial owner is a trustee. The information required to be submitted must be independently verified. 
• A failure to register or to comply with the requirement to update the ROE annually will mean that an overseas entity:
  • cannot be registered at HM Land Registry as the legal owner of a qualifying estate; and
  • where already registered as legal owner, cannot sell, charge or grant a lease of the land for a term of more than seven years as any buyer, chargee or lessee will not be able to register the disposition at the Land Registry.
• Compliance will be enforced through restrictions on the title registers of land owned by overseas entities. There will also be criminal sanctions for non-compliance with the requirements and for delivering misleading, false or deceptive statements or information to Companies House.
• For overseas entities that already own registered land there is a six month transition period in which to register in the ROE.

When does an overseas entity need to register in the ROE?

Land already owned by an overseas entity

• If the overseas entity was registered at the Land Registry as proprietor of a qualifying estate before January 1, 1999, the regime is not engaged and there is no need to register in the ROE in respect of that qualifying estate.
• If the overseas entity applied to the Land Registry to register as proprietor of a qualifying estate on or after January 1, 1999 but before August 1, 2022 there is a transitional period of six months (ending on January 31, 2023) during which the overseas entity is required to register in the ROE. Note that where such an overseas entity acquires certain additional interests in land before the end of the transitional period this will accelerate the requirement for it to register in the ROE (see below).
• Overseas entities that disposed of land on or after February 28, 2022 so that they are no longer landowners in the UK do not need to register in the ROE but will nevertheless need to deliver to Companies House (during the transitional period) details of the disposal and information about the overseas entity, its registrable beneficial owners or its managing officers as at the time immediately before the disposal.

Land being acquired by an overseas entity 

• Overseas entities applying to the Land Registry to be registered as proprietor of a qualifying estate must be registered in the ROE at the time of the application and must include with the application the overseas entity identification number (OE ID) issued by Companies House as evidence of registration in the ROE. 
• This is subject to a short concessionary period in that overseas entities applying to the Land Registry between August 1, 2022 and September 4, 2022 will not have to supply an OE ID to the Land Registry with the application (but will still need to apply for registration in the ROE and should supply the OE ID if they have it in time).

What information must be included with an application for registration in the ROE?

Registration involves the overseas entity providing information about itself and its “registrable beneficial owners” or, if there are none, its managing officers. Applications for registration must include (amongst other things):

• A statement that the overseas entity has taken reasonable steps to identify its registrable beneficial owners.
• A statement that the overseas entity:

1. has identified one or more registrable beneficial owners and has no reasonable cause to believe that there are others; or
2. has no reasonable cause to believe it has any registrable beneficial owners, in which case information about the managing officers of the entity must be provided.

• The “required information” (explained below) in relation to each registrable beneficial owner that has been identified.
• The verification information described below.

Additional information must be included with an application for registration submitted during the transitional period ending on January 31, 2023:

• If the overseas entity has not made a “relevant  disposition of land” (being a transfer, charge or grant of a lease of more than seven years) during the period starting on February 28, 2022 and ending with the making of the application, the application must include a statement to that effect; or
• If the overseas entity has made such a disposition during that period, the application must include prescribed details about each such disposition and also the statements and information mentioned above in relation to the overseas entity as at the time immediately before each such disposition.

Once registered in the ROE, there is a further duty on overseas entities to update the information on the ROE every 12 months.

Who is a registrable beneficial owner?

Subject to some limited exemptions, a person will be a beneficial owner of an overseas entity if they meet one (or more) conditions – broadly that they:

• directly or indirectly hold (a) more than 25 per cent of the shares or voting rights in the overseas entity or (b) the right to appoint or remove a majority of the board of directors of the overseas entity;
• have the right to exercise, or actually exercise, significant influence or control over the overseas entity; or
• have the right to exercise, or actually exercise, significant influence or control over a trust, partnership or other entity that is not a legal person under the law by which it is governed and the trustees or members of the entity (in their capacity as such) meet any of the above conditions.

The Act covers situations where rights or shares are held in a “joint arrangement” or where shares are held by a nominee, to try to ensure that a beneficial owner cannot disguise their control or ownership.  Provision is also made for situations where an interest in an overseas entity is held through a chain of legal entities.

What steps have to be taken by an overseas entity to identify its registrable beneficial owners?

An overseas entity is required to take reasonable steps to identify any registrable beneficial owners before it applies to be included on the ROE and before it provides updated information. If an overseas entity identifies any registrable beneficial owners it must take reasonable steps to obtain the required information about them and, in respect of any registrable beneficial owner who is a trustee, the required information about the trust.

The requirement to take reasonable steps includes a requirement for the overseas entity to serve notice on any person it knows (or has reasonable cause to believe) is a registrable beneficial owner requiring them to confirm the position and to provide the required information about themselves.

An overseas entity also has the power to serve notice on a person where it knows (or has reasonable cause to believe) that they know the identity of a registrable beneficial owner or the identity of a legal entity that is a beneficial owner of the overseas entity, or a person likely to have knowledge of the identity of a registrable beneficial owner or beneficial owner.

What is the “required information” in relation to each registrable beneficial owner?

The overseas entity must submit certain “required information” in relation to itself and its registrable beneficial owners (if any), or its managing officers if there are no registrable beneficial owners.

The required information to be provided in relation to a registrable beneficial owner will depend on whether they are an individual, a legal entity or a government or public authority. For example, in relation to an individual it will include their name, date of birth, nationality, residential address and any service address. In relation to a legal entity it will include its name, registered or principal office, service address and its legal form and the law by which it is governed.

For all registrable beneficial owners, the required information includes confirmation of whether the individual or entity is a designated person (within the meaning of s9 (2) of the Sanctions and Money Laundering Act 2018) where that information is publicly available, the date on which they became a registrable beneficial owner, which of the conditions for being a registrable beneficial owner is met and why it is met. In the case of individuals and legal entities (other than governments or public authorities) it must also include confirmation of whether the individual or entity meets that condition by virtue of being a trustee.

Where the registrable beneficial owner is a trustee, information about the trust must also be provided.

What are the verification requirements?

A UK-regulated agent must conduct verification checks on the required information about the overseas entity itself and its registrable beneficial owners or managing officers.

The agent must be based in the UK and be supervised under the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017. This means that they must fall into one of the following categories: credit and financial institutions; auditors, insolvency practitioners, external accountants and tax advisers; independent legal professionals; trust or company service providers; estate agents.

The UK-regulated agent must request in advance an agent assurance code from Companies House. This confirms that the agent has authorisation to file verification statements for an overseas entity. Companies House cannot register an overseas entity without such a code and the verification statement itself.

Verification must be based on documents or information obtained from a reliable source which is independent of the person whose identity is being verified.

What is the application process for registration?

The ROE is (largely) a digital service and overseas entities and their agents will usually be required to register online.

The steps required to register include:

• Creating a Companies House account.
• Making an application for registration which will include providing:
  • the name and email address of a contact in relation to the application;
  • the required information about the overseas entity and its registrable beneficial owners or managing officers;
  • the required information about the UK-regulated agent that conducted the verification checks, including the agent assurance code and verification statement;
  • information about trusts, if relevant.
• Paying a registration fee, currently £100.

Several independent company service providers have announced that they intend to provide registration and verification services for overseas entities. Companies House has stated in guidance that it will be quicker and easier for an application to register an overseas entity to be made by the same UK-regulated agent that carried out the verification checks on that overseas entity.