The Register of Overseas Entities (ROE) came into force in the UK on 1st August 2022 and has been introduced by the new Economic Crime (Transparency and Enforcement) Act 2022.
Changes to the ROE mean that overseas entities who are existing registered proprietors of (or are proposing to become a registered proprietor of) a property or land in the UK (the “qualifying estate”) they must register with and will have to provide additional information to Companies House about who their registrable beneficial owners or managing officers are. In case of non-compliance with this rule, they will not be allowed to sell or transfer the qualifying estate.
The ROE carries forward the UK Government’s drive for greater transparency in the beneficial ownership of trusts, companies and other entities. Previous legal measures - currently still in existence - include the Register of Persons with Significant Control of UK companies ("the PSC Register") and HMRC’s Trust Registration Service ("TRS") which requires disclosure of beneficial ownership and other information in relation to UK trusts and some non-UK trusts.
What is an overseas entity?
This is an entity with its own separate legal personality, such as a company or other organisation, that is governed by the law of a country outside the UK.
Importantly, non-UK corporate trustees also fall within the definition of "overseas entity" and such trustees therefore have an obligation to register on the ROE, providing that they hold or acquire a “qualifying estate” in UK land on behalf of the trust. Trusts per se, however, are not overseas entities (because they are not legal entities with their own separate legal personality) and neither are trustees who are individuals.
It should be noted that if the qualifying estate is directly held by the trust with a non-UK corporate trustee, the latter must register on the ROE, while the details of the trust are not required. However, if the qualifying estate is held via a non-UK resident underlying company, then this underlying overseas entity must register on the ROE should the trustee, as a “registrable beneficial owner” of the overseas entity, owns a qualified ownership as specified in the paragraph below (for example more than 25% of the shares of the overseas entity) and the trust’s details must be provided.
No such information is required should the underlying company is UK resident, since it is subject to the Persons with Significant Control (PSC) regime.
What is a registrable beneficial owner?
A registrable beneficial owner is any individual person or legal entity or a trustee of a trust or a government or public authority or a member of a firm that is not a legal person under its governing law that:
- holds, directly or indirectly, more than 25% of the shares in the [overseas] entity
- holds, directly or indirectly, more than 25% of the voting rights in the [overseas] entity
- holds the right, directly or indirectly, to appoint or remove a majority of the board of directors of the [overseas] entity
- has the right to exercise, or actually exercises, significant influence or control over the [overseas] entity
As already mentioned before, where the trustee of a trust is identified as a "registrable beneficial owner" of an overseas entity, then the required information includes details about this trust including the date of the trust’s creation, trustee’s name and date of becoming trustee, details of each beneficiary and settlor of the trust and details of any person who, under the terms of the trust, has rights in respect of the appointment or removal of trustees or in respect of the exercise by the trustees of their functions.
It follows that Private trust company structures (PTCs) holding entities abroad may be particularly affected by these changes and it will depend on the circumstances of the trust in each single case.
What information on the ROE is accessible to the public?
In principle, anyone can inspect the ROE and require copies of material on it. However, this is limited and subject to exclusions. Broadly speaking, personal information regarding overseas entities, beneficial owners and/or managing directors will not be made available for inspection to the public.
Companies House may not disclose information about trusts that has been provided to it in connection with an application for registration on, or updating of, the ROE unless the disclosure is to HMRC or another body exercising public functions specified in the legislation.
The legislation has, however, provided for a further category of “information protected” whose disclosure could pose a serious risk of violence or intimidation to individuals.
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