Ever since the Register of Overseas Entities (ROE) was legislated for in March's Economic Crime (Transparency and Enforcement) Act 2022, one of the major topics of conversation has been when it would become operative. Companies House has now confirmed in its blog that it intends to open the ROE on 1 August 2022.
The ROE is part of the government's strategy to combat economic crime, by requiring overseas entities owning UK land or property on or after 1 January 1999 to declare their beneficial owners or managing officers (if there are no beneficial owners) on the ROE. If entities within the scope have not complied, the Land Registry will effectively restrict their ability to deal with such UK land or property in future by refusing to register the activity on the Land Register. Certain failures in relation to the register will also be criminal offences, with consequent fines and even imprisonment. With a commencement date of 1 August 2022 and a requirement to comply within six months, these restrictions will come into force by 1 February 2023. However, assuming that the new regime is implemented in full on 1 August, overseas entities may well be impacted before 1 February 2023, as those entities which are in the process of acquiring land will not be able to complete on or after 1 August 2022 unless they have registered on the ROE.
To further complicate matters, the recently published Register of Overseas Entities (Verification and Provision of Information) Regulations 2022 require that, before an overseas entity registers on the ROE, a UK supervised 'relevant person' must verify the required information. The verification checks must be carried out by a UK based agent that is supervised under the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017 which includes independent legal professionals and trusts, or company service providers. Companies House has advised that it will be quicker and easier for the supervised agents to register on behalf of overseas entities – saying that the registration may take longer to process if done by the overseas entities themselves.
This secondary legislation also provides that where an entity disposed of a property on or after 28 February 2022, the entity's details will remain on the ROE for two years.
Given these additional steps and the short deadline until the operational date, it is imperative that all those affected start to gather the relevant information now and factor any potential registration delays into acquisition timetables. Companies House has indicated that guidance will be published in the coming weeks, but given the deadlines and the severe potential impact, please contact a member of our team if you believe the ROE will affect you or your clients.