ROE means: A new register of overseas entities
ROE must be maintained by the Companies House and the status shall be updated in the register from the 1st of August 2022.
The Provisions relating to ROE & the registration of overseas entities in the UK’s land registers will come into force on 5th September 2022.
The timeline from when the entities will fall in this provision is:
· when the overseas entity already owns a property in the UK, and they acquired that property after 1 January 1999 in England and Wales,
· after 8 December 2014 in Scotland,
· or after 5 September 2022 in Northern Ireland,
The above-mentioned entities must submit their application to register in the ROE before 1 February 2023. The overseas entity cannot proceed with any transactions with their UK property on or after 1 February 2023 until they are registered in the ROE.
All the Provisions for the ROE have been made under the Economic Crime (Transparency and Enforcement) Act 2022. After the 5th of September 2022, an overseas entity which acquires/owns property in the UK must be registered in the ROE.
Applicability
The Act applies to all non-UK incorporated companies (even if the company is a UK tax resident), LLPs, foreign foundations and non-UK partnerships which have a separate legal personality under the laws of the country. It is pertinent to mention here that ROE applies to all the companies which are registered as the proprietor of ‘A relevant interest’ in property in the UK. Companies or LLPs incorporated in Jersey, Guernsey and the Isle of Man are all non-UK entitles, so are subject to the Act.
Concept of relevant interest in the UK property?
In England and Wales, an entity with freehold or a lease for more than seven years where the application to register the overseas entity as owner or tenant was made on or after 1 January 1999. In Scotland, a relevant interest in the property is ownership of property with a lease for more than 20 years, when the application to register the overseas entity as owner or tenant was made on or after 8 December 2014. In Northern Ireland, an entity with a lease of more than 21 years where the application to register the overseas entity as owner or tenant was made on or after 5 September 2022.
The timeline mentioned before was derived from the principal of relevant interest in the property. The properties cannot be accounted for within the regime, as being the registered proprietor of a charge or standard security.
How does an overseas entity register on the ROE?
To register on the ROE, the overseas entities must provide information about themselves, any registrable beneficial owners and, in certain circumstances, about the managing officers of the overseas entity. Before an application to register on the ROE can be made, and information notice must be sent to each registrable beneficial owner asking them to confirm that the information the applicant retains is correct and invite them to provide any information which is missing. The registrable beneficial owners have one month to reply to this notice.
The information submitted to Companies House must be independently verified by one of a limited number of people acting in the course of a business carried on by that business in the UK.
The steps overseas entities have to take to comply with the ROE requirements take time to implement, so the entities affected are encouraged to gather the necessary information as soon as possible.
What should be added to the application to Companies House?
The application must include one of the following statements:
The entity has identified any registrable beneficial owners and has given the relevant information.
The overseas entity does not believe that it has any registrable beneficial owners;
The overseas entity believes that it has registrable beneficial owners but cannot provide the necessary information.
What should be taken care of?
· Before making the application to Companies House, the overseas entity must give one month’s notice to its beneficial owners.
· Beneficial owner is anyone who holds at least 25% of the shares or voting rights in the entity, or who exercises or has the right to exercise significant influence or control over the entity.
· Failure to register and failure to update the register are criminal offences including fines of up to £500 per day or a prison sentence of up to 5 years.
· Only some of the information registered on the ROE is accessible to the public. Some information about beneficial owners is exempt from inspection.
If an overseas entity has property in the UK, then they must apply to register in the ROE before the 1st of February 2023. The application must include a statement that the entity has not made a relevant disposition of property since 28 February 2022 or must include details of any disposition which has been made.
For Annex: Summary of changes between draft 2018 Bill and draft 2022 Bill and to understand the whole procedure visit: