Why real estate owners must act now
The Register of Overseas Entities (ROE) came into force in the UK on 1 August 2022. The UK government introduced an ROE through the new Economic Crime Transparency and Enforcement Act 2022 to combat economic crime and ensure legitimate businesses continue to invest in the UK. The Register of Overseas Entities makes anonymous foreign owners of UK property reveal their identities.
The legislation indicates that if you participate in any real estate ownership through an overseas entity in the UK, you must register with Companies House, including a declaration of the beneficial owners or managing officers, by 31 January 2023.
The UK government considers an overseas entity as “any company or organisation that has a legal personality and is governed by the law of a country or territory outside of the UK.”
Previously, only UK companies needed to disclose their owners on a public register.
However, other jurisdictions do not have a similar register and have difficulty verifying the organisation’s beneficiaries or controlling parties and monitoring suspicious activity.
A beneficial owner is:
- a person owning 25% o more of the shares or voting rights in an entity or,
- a person who has the right to appoint or remove a majority of the board of directors or,
- who exercises or is entitled to exercise significant control or influence over the entity
In addition, if you are also a trustee, further details about you and the trust need to be disclosed.
Companies House will collect the beneficiaries’ data, such as date of birth, residential address, and email address. The email address will not show to the public and the residential address will be shielded from public view if a service address is provided. Also, only the month and year of birth will show to the public. The data will, however, be shared with other government departments and credit reference agencies unless the beneficial owner has previously applied for protection from this because of a serious risk to themselves. In addition, the legislation requires the overseas entity to update the information held by Companies House annually.
The information in the application must get independently verified by a UK-based “relevant person” which includes financial institutions, auditors, tax advisors, independent legal professionals, and company service providers.
The Act applies to all overseas entities that have purchased property or land on or after:
- 1 January 1999 in England and Wales
- 8 December 2014 in Scotland
- 1 August 2022 in Northern Ireland (The Republic of Ireland is an overseas jurisdiction for the ROE)
So that companies avoid non-disclosure of sale, the Act applies retrospectively to any property or land sold in the UK on or after 28 February 2022.
Any company or organisation that does not comply with the Act will encounter harsh consequences. Fines of up to £2,500 a day or up to five years of imprisonment could occur, and future restrictions when buying, selling, transferring, leasing, or charging property or land.
How can Wilder Coe help?
As the Act is complex and the stakes high for overseas entities, it is critical you receive timely advice and remain on the right side of UK compliance.
Ian Saunders, Head of Company Secretarial, is a registered agent, or “relevant person”, for ROE filings with Companies House and will complete the necessary verification checks on all beneficial owners and managing officers.
Please get in touch with Ian here to arrange a consultation to discuss the registration of overseas entities.
