The Register of Overseas Entities
The Register of Overseas Entities (“ROE”) is a new register to be maintained by Companies House which will have a significant impact on conveyancing transactions in Scotland for overseas entities. An overseas entity for the purposes of the new regime is any legal person that is governed by a law of a country or territory outwith the UK.
This UK-wide register has been created by the new Economic Crime (Transparency and Enforcement) Act 2022. It is understood that the creation of these new transparency measures has been accelerated as a result of the war in Ukraine. From 1 August 2022, overseas entities are required to register in the ROE and keep that registration up to date.
What are the requirements?
From 5 September 2022, an overseas entity transacting with land requires to have the unique identification number obtained as a result of registration with Companies House in order to register dealings with land in any of the land registers in the UK.
What is covered?
In Scotland, interests in land covered include ownership of property or a lease of land of more than 20 years or an assignation of a lease of land for more than 20 years where that interest was registered after 8 December 2014.
For now, entities who have a registered interest in land in Scotland that was registered prior to 8 December 2014 are not required to register with ROE when transacting with land in the ways described above.
What does this mean for property already owned in Scotland?
Where an overseas entity already owns a property in Scotland and it acquired that property after 8 December 2014, you must submit an application to register in the Register of Overseas Entities before 1 February 2023. You will be unable to transact with this property unless this has been done. This also includes financing. Not doing so will result in a criminal offence being committed.
Any application for registration in the ROE must include a declaration that the entity has not completed a transfer of an interest in land since 28 February 2022, otherwise details of that transfer must be included.
A lack of registration in ROE when it is required will result in that deed being rejected by the Land Register of Scotland and significant criminal penalties will apply. These offences are deemed to have been committed by both the entity and its officers and can result in a fine of up to £2,500 per day and/or imprisonment of up to 5 years.
What do I need to do?
The process for registering in the ROE may be time consuming and it is recommended that registration is done sooner rather than later. An entity that requires to be registered in the ROE needs to provide information about itself, any registrable beneficial owners and, in some cases, the officers of the overseas entity will also require to have their identities disclosed.
An information notice is sent to each beneficial owner. They must confirm its contents are correct. They have a limited time (one month) to reply to this notice. All of the information must be independently verified.
There are a number of tests set out by the government when assessing the nature of a “beneficial owner”. These relate to ownership of 25% of the shares in an entity; 25% of the voting rights in an entity; a right to appoint or remove a majority of the board of directors or a right to exercise significant influence or control. The full guidance is available here: https://www.gov.uk/guidance/register-an-overseas-entity
You may also be interested in our recent article on the Register of Persons Holding a Controlled Interest in Land which may also affect overseas entities.