Registered overseas entity – redefined

On 4 March 2024 the definition of 'registered overseas entity' in Schedule 4A of the Land Registration Act 2002 was updated by the Economic Crime and Corporate Transparency Act 2023. 

What has changed?

From 4 March 2024 an overseas entity will no longer be treated as a 'registered overseas entity' for the purposes of the LRA 2002 unless it has both complied with its updating duty under the ROE regime and now also complied with any notice served by the registrar of companies under a new power contained in s.1092A of the Companies Act 2006 (which gives the registrar the power to require additional information to determine whether applicable filing obligations have been complied with).

Why does this matter?

In short, in England and Wales, if an overseas entity who owns property is not a 'registered overseas entity' for the purposes of the LRA 2002, then under the ROE regime that overseas entity is severely limited in its ability to deal with its property. It is a serious offence for an overseas entity and its officers to make any disposition of a freehold or leasehold estate in breach of the legislation.

Since the ROE regime was introduced it has therefore become standard practice for those buying, taking a registrable lease from or lending to an overseas entity to check at Companies House that the overseas entity that are dealing with is a 'registered overseas entity' and where relevant has complied with its updating duty. Otherwise, that party may find themselves unable to satisfy any ROE Land Registry restriction on the overseas entity's title and to register their transaction at the Land Registry. 

Overseas entities who are purchasing freehold or leasehold property also need to be a 'registered overseas entity' in order to make an application to become the registered proprietor a freehold or leasehold estate.

The difficulty now is that, unlike checking whether or not an entity has complied with its updating duty which it is possible to do by checking the Companies House website, it is currently not possible to independently verify whether or not a notice has been served under 1092A of the Companies Act 2006 or whether the overseas entity has responded to the notice.  It is unclear at this stage whether such an independent check will become possible. This presents a challenge for those dealing with an overseas entities and at present it is likely parties will need to look to assurances from the overseas entity and some form of contractual wording for comfort.    

Does the Economic Crime and Corporate Transparency Act 2023 make any other changes to the ROE regime in England and Wales?

Yes. Provisions already in force include expanded registration requirements for beneficial owners to capture certain situations involving trusts and nominees. This is to close perceived loopholes in the legislation.

In addition, overseas entities must now provide their principal office address rather than having the option to provide either a registered office or principal office address as part of the required information which is submitted on registration or as part of an update.

Provisions yet to come into force will include a new requirement for an overseas entity to provide the title numbers of any freehold or leasehold estates it owns.  Amendments will also capture certain further 'required information' in relation to trusts and information about changes in beneficiaries under certain trusts where the trustee is itself a registrable beneficial owner. Further information may also be required from certain overseas entities in relation to the transitional period.