There was much hype about the launch of the Register of Overseas Entities (ROE) after many years of consultation. The invasion of Ukraine encouraged the UK Government to finally implement new legislation to help identify overseas entities that own land or property in the UK. The question is, has it been effective?
The Law came into force on 1st August 2022 and gave existing overseas entity owners a six-month period to identify the registrable beneficial owners of the entities; verify the information and register the entity with Companies House. The verification process, combined with the latest version of guidance released on 12th January 2023, has made the timeline incredibly tight for many. This is clearly evidenced by the backlog at Companies House, where a number of entities submitted prior to the 1st February 2023 deadline have still not been registered.
Following the deadline, there has already been significant media coverage around the information provided. Much of the coverage highlights that the publicly available information does not necessarily identify the true beneficial owner. The main reason for this is that the legislation fails to require this in a number of very basic situations. It is much more concerned with controlling interests in the entities, which, particularly in the case of nominees, is not the right question. This deficiency was pointed out by the House of Lords when the legislation was working through Parliament.
This leads to the inevitable question of what is next for the register. A new act has already been mooted to try to deal with this deficiency, but is it needed? In the situation where an overseas entity acquires a property as nominee, there has been a requirement since 6 October 2020 to provide details on the trust register. The key difference between the two registers is that the trust register is not published publicly. It is possible to request information from the trust register, but in most circumstances only where a legitimate interest can be demonstrated.
Whilst the trust register might not catch historic nominee arrangements (the register of overseas entities only covers transactions since 1 January 1999), it does cover all newer acquisitions. It must therefore be asked, is there any real benefit in extending the scope of the register of overseas entities if the same information will need to be reported on two separate registers?
The only real benefit achieved by extending the register of overseas entities is to widen the information available to the public domain. This would be an interesting step considering the recent decision in the European Court of Human Rights, which found that public beneficial ownership registers breached an individual's right to privacy. As such, European registers are no longer public. By exposing more information to the public, would the UK actively be disincentivising inward investment?
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