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11 Jan 2024

Register of Overseas Entities: Annual update and future changes

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Following the introduction of The Economic Crime (Transparency and Enforcement) Act 2022 ("ECTEA") which required overseas entities holding UK land to register on the UK Register of Overseas Entities (the "Register") by 31 January 2023, we are currently in the midst of the first annual update period.

In addition to creating the Register, ECTEA created a requirement for overseas entities to keep information on the Register up to date. Accordingly, the overseas entity will be required, within 14 days after the end of each anniversary following initial registration (the "Update Deadline"), to deliver to Companies House:

  • a statement confirming whether or not there has been a change in the registerable beneficial owners during the update period;
  • if so, the required information about each person who has become or ceased to be a registrable beneficial owner during the update period and the date on which each of them became or ceased to be a registerable beneficial owner ("RBO"); and
  • if there has been any changes to the required information about the entity itself, details of any such changes.

If an overseas entity's registerable beneficial ownership circumstances have not changed in the update period, there is no requirement for the information to be verified.

However, where there are updates to the information submitted as part of the initial registration or there is new information being submitted, the updated/new information will need to be verified by a 'regulated person' in the same manner as the initial registration.

Overseas entities have been able to file their update statement online since the beginning of August, which also now includes those with a trust within the structure. To do so, the overseas entity will need to request an authentication code before they file. This must be provided by anyone filing on behalf of the overseas entity.

Many overseas entities will likely seek to maximise the 'validity' of their current OEID by leaving their update submission until the 14 day window after the update period. However, with the upcoming changes to ECTEA, which are discussed further below, overseas entities might want to consider filing before the changes come into force.

An overseas entity can shorten the update period by notifying Companies House of the shortened update period and delivering the statements and information required within the period of 14 days after that shortened period.

Failure to comply with updating duty

If an overseas entity fails to comply with the updating duty, it will commit an offence along with every officer of the overseas entity who is in default. The offence will continue until the overseas entity has delivered the required statements and information.

To date, despite letters from Companies House indicating an intention to levy penalties on overseas entities who failed to comply with initial registration by reference to the value of the UK land held, we are unaware of any penalties having been applied, or of any prosecution proceedings in relation to the offences. It is, however, still relatively early days for this obligation/offence.

In addition to committing an offence and being subject to penalties and/or prosecution for failing to update by the Update Deadline, an overseas entity will cease to be regarded as a 'registered overseas entity' until such time it submits its update to Companies House. Accordingly, any Land Registry application on behalf of such overseas entity seeking to deal with UK land will not be registered.

Companies House will also note in the Register that the overseas entity is late in filing its update, with such note being publicly available.

Removal from the register

Despite Companies House's recent announcement that a system for removal will be available in 'early 2024', there is still no clear method to do so for overseas entities that are no longer required to be on the Register.

It is now clearer that this cannot take place until the overseas entity no longer appears as the registered owner of any relevant interest in land, but with current Land Registry turnaround times, this could lead to a delay before the entity can be removed.

Hopefully a process will be implemented once the current update window has closed.

Changes following the Economic Crime and Transparency Act 2023 ("ECCTA")

The ECCTA received Royal Assent on 26 October 2023 and has made various amendments to the ECTEA.

The various changes have not yet been brought into force, and we do not have a date when this will happen.

It is therefore possible that some updates due this year will need to take into account the new rules, although with only just over a month left (for entities which met the original deadline) it is looking less likely now.

The change regarding retrospective beneficial owner information (as discussed below) will not apply to any entity which filed on or before 31 January last year, as the change is subject to a three-month grace period once it comes into force.

We therefore anticipate that the updating process this year will be relatively painless for overseas entities, where there have been no changes.

The same may not be true next year, once the amendments below come into force – particularly where there have been changes in the beneficial owners since 28 February 2022, where there are corporate trustees in the ownership chain, where the overseas entity holds land as a nominee, or where the overseas entity holds multiple UK properties.

Nominee arrangements – where land is held by the overseas entity as a nominee for another person (i.e. the beneficiary), details of the beneficiary and (where relevant) details of the beneficial owner of such beneficiary will need to be supplied. This is not always the case at present, unless the beneficiary exercises significant influence or control over the overseas entity.

Retrospective registerable beneficial ownership information – overseas entities will be required to provide information on any RBOs who became or ceased to be such in the period 28 February 2022 to 31 January 2023. This look back is also required for any changes to trust beneficiaries for the same period. Any RBOs who ceased to qualify as such before the original ROE application was made will now find that their details are included on the public register. Changes to trust beneficiaries will remain private, like other trust information, although we note that there is a current consultation on whether this information should be more widely available.

Disclosure of all trustees – all trustees in the ownership chain will be RBOs and no longer exempt from disclosure. Previously trustees who held an interest via another entity which was itself an RBO were not required to be included on the Register. This is most likely to catch the trustee of purpose trusts which own private trust companies ("PTC") and is in keeping with the government's stated aim to increase transparency for trusts holding UK land.

Additional information to be provided – where the settlor or grantor of a trust is a legal entity, any RBO of that entity will need to be disclosed.

Changes in beneficial ownership – it will be necessary to disclose changes in beneficiaries of trusts which have occurred during the relevant annual update period, rather than only providing a snapshot of the position as at the annual update. This information will (for now) not be public.

Land information – overseas entities will need to disclose the title number of all qualifying estates of which they are the registered proprietor. This information will also need to be verified by a UK regulated agent. We do not yet know how this will be done but hope it could be verified via the Land Registry data.

Address information – overseas entities and corporate beneficial owners/managing officers will be required to use their principal office address on the Register, rather than their registered office. There is currently no definition of principal office in the legislation, but we expect this to be clarified in the guidance.

Contact us

If you would like to discuss any of the above further, please contact one of our team.

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