The Register of Overseas Entities – closing loopholes and extending the scope with ECCTA

The Economic Crime and Corporate Transparency Act 2023 (ECCTA) introduces changes to the registration regime affecting overseas entities that own UK registered land, including requiring more extensive and frequent disclosures to Companies House. The first set of changes under ECCTA came into force on 4 March, with more to follow.

We are now over a year on from the 31 January 2023 deadline by which overseas entities owning registered land in the UK had to register on the Register of Overseas Entities (ROE) at Companies House. Overseas entities will therefore be familiar with the hurdles that must be jumped through for registration on the ROE and the subsequent obligation to update information annually.

Despite that, we’re sorry to say that it is not time to relax just yet. In continued efforts to broaden the transparency of ownership of land in England and Wales, ECCTA (which was granted Royal Assent in October 2023) imposes additional disclosure obligations on overseas entities to be aware of. The Act is coming into force in phases, and the first tranche of those changes has started to take effect.

The following provisions that impact the ROE came into force on 4 March:

1. Nominees and Trusts

Critics of the initial rules for registration of overseas entities flagged that the ‘true’ beneficial owners of land held by a nominee were essentially ignored for the purposes of the ROE. There were also loopholes where ownership structures involved trusts. ECCTA seeks to fill these holes by expanding the meaning of registrable beneficial owners so that beneficial owners of the land and any beneficial owners of those entities must be disclosed as part of the registration requirements.

Trustees that indirectly own an overseas entity must now be registered, regardless of where they sit in the group structure. A further loophole involving private corporate trustees has also been closed.

These obligations apply with immediate effect for any new applications to register an overseas entity on the ROE. For any overseas entity that is already registered, compliance is only required as part of its ongoing duty to update arising from and including 4 June 2024.

As well as identifying any additional registrable beneficial owners that will need to be disclosed, overseas entities will want to consider their holding structure and existence of any trusts ahead of 4 June 2024.

2. Duty to provide further information

Perhaps more importantly for real estate transactions, although an overseas entity may successfully be registered, this registration can become invalid if the overseas entity fails to provide information that is requested by a notice issued by Companies House. Using this new notice power, Companies House can request information to evidence compliance with the overseas entity’s statutory obligations and to clarify any confusion on the register. An invalid registration will result in the overseas entity being unable to deal with its registered property interests. It is therefore essential that notices received are monitored and promptly responded to in full, although it remains unclear how a party dealing with an overseas entity can verify whether the overseas entity has indeed responded to a notice.

There are more changes in the pipeline under ECCTA that will affect overseas entities, although secondary legislation will be needed to bring them into effect. These include:

Retrospective reporting obligations

Under the existing regime, the process for registering on the ROE before the 31 January 2023 deadline required overseas entities that held registered land on 28 February 2022 to disclose changes in their beneficial owners only if they made a qualifying disposition after that date and before registration on the ROE. This created a gap where beneficial owners changed before the overseas entity made a disposal (or where there was no disposal during this period). To increase transparency of ownership further, ECCTA introduces a retrospective obligation to disclose any changes to the beneficial owners between 28 February 2022 – 31 January 2023.  

Title numbers of all qualifying land held

When applying to register an overseas entity on the register or when submitting an annual update, Companies House will soon require the applicant to list all title numbers within the ownership of the overseas entity. This could be an extensive undertaking for overseas entities with large portfolios. If you have difficulty collating this information, our team can help with searches at the Land Registry to identify all relevant title numbers.

Whilst we do not yet know when these further provisions will come into force, it is worth being aware of them so that you can prepare as needed. In the meantime, watch this space for further updates.

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