The introduction of the Register of Overseas Entities (ROE) and the Economic Crime (Transparency and Enforcement) Act 2022 (ECTEA) has significant implications for overseas entities (OEs) owning UK land. Compliance with the ROE and the annual updating duty is crucial to avoid legal consequences. In this article, we will provide an overview of the practical implications of updating the ROE, including considerations for OEs who have disposed of all UK land.
Understanding the Updating Duty:
The ECTEA mandates an annual updating duty for OEs registered on the ROE. This duty requires OEs to confirm any changes in their beneficial ownership within 14 days after the expiration of 12 months from their initial registration. Failure to comply with the updating duty is an offense and may prevent an OE from acquiring or dealing with UK land. Companies House, the entity responsible for maintaining the ROE, has recently published guidance on enforcement, signalling its intention to utilise its enforcement powers.
Enforcement Role of HM Land Registry:
HM Land Registry (HMLR) also plays a role in enforcing compliance with the ECTEA requirements. OEs that fail to fulfil the updating duty will not be considered registered on the ROE until they rectify the non-compliance. Consequently, such OEs will be barred from acquiring or disposing of legal title to land. OEs registered on the ROE must provide their OE ID to HMLR for any dealings, but HMLR will require proof of compliance with the updating duty in addition to the OE ID.
- Verification of Compliance: To register an acquisition or relevant disposition by an OE at HMLR, it is essential to ensure that the updating duty has been fulfilled. Parties involved in a transaction must confirm compliance to facilitate the completion of registration and the transfer of legal estate.
- Disposal of All UK Property: OEs who have disposed of their only or last remaining UK property cannot apply for removal from the ROE until the disposal is registered at HMLR. Only when the registration process at HMLR is complete can an OE confirm that it is “not registered as the proprietor of a relevant interest in land” and subsequently apply for removal from the ROE. During this registration period, the OE remains on the ROE and is subject to the annual updating duty.
Companies House’s recent guidance suggests that enforcement action will be determined based on the public interest, risk posed, and seriousness of any breach. OEs who have disposed of all UK land may be concerned about their obligation to update the ROE. While Companies House may consider a pragmatic approach, clarity on their enforcement stance is yet to be fully established.
Updating the Register of Overseas Entities and complying with the annual updating duty is essential for OEs owning UK land. Failure to fulfil these obligations can result in legal consequences and restrictions on land dealings. OEs should prioritise compliance and seek professional guidance to navigate the practical implications effectively.
How Rooks Rider Solicitors LLP Can Help:
If you or your clients are still uncertain about the necessary steps to take regarding the registration of relevant overseas entities and the annual updating duty, Rooks Rider Solicitors LLP is here to help. As a supervised agent, we can conduct verification checks on all beneficial owners and managing officers of relevant overseas entities that require registration. We are also able to file annual updates on behalf of these entities at Companies House.
For further information and assistance, please contact Robert Drysdale, Karen Methold or Chris Cooke. Our experienced team can provide expert advice and assistance in understanding and fulfilling the requirements of the ROE, ensuring a smooth process and compliance with UK regulations.