Register of Overseas Entities - changes introduced by the Economic Crime and Corporate Transparency Act 2023

On 4 March 2024, a number of changes to the Register of Overseas Entities (ROE) brought in by the Economic Crime and Corporate Transparency Act 2023 (ECCTA) became law.

Background

The ROE was established by the Economic Crime (Transparency and Enforcement) Act 2022 (ECTEA).  With effect from 1 August 2022, overseas entities holding "qualifying estates" (freehold or leasehold interests of over 7 years in land or other property) in the UK must be registered on the ROE at Companies House.  

Our note here provides more detail about the ROE and the deadlines and transitional periods that applied when it was introduced.

Changes introduced by ECCTA

Changes introduced to the ROE by ECCTA that became law on 4 March 2024, include the following:

• Nominees - overseas entities that hold "qualifying estates" (freehold or leasehold interests of over 7 years in land or other property) in the UK, as nominee for another person or persons must disclose details about that person on the register.  If the property is held for trustees, details of the trustees and the underlying trust (settlor, beneficiaries, protector (if relevant) etc.) must be disclosed. Until now, an overseas entity was obliged to disclose details of its own beneficial owners, e.g. its shareholders and directors, but not the persons for whom it actually held the land.  Sometimes, they would be one and the same, but not necessarily.  This potential discrepancy has now been resolved.
• Registrable beneficial owners: legal entities - a legal entity that is a beneficial owner of an overseas entity by virtue of being a trustee, will be a registrable beneficial owner and will need to provide details of the underlying trust - previously, that was only the case if it was also subject to its own disclosure requirements, i.e. it provided trust services and was governed by the law of a jurisdiction in which such services were regulated by a supervisory authority.
• Chains of entities including a trustee - wherever there is a trustee in the chain of ownership of an overseas entity, it will now fall under the definition of registrable beneficial owner.  To ensure maximum transparency, the Secretary of State has also been given power to expand the description of persons who are registrable beneficial owners further, if necessary, where the overseas entity is part of a chain of entities that includes a trustee.
• Disclosure of protected trusts information - information about underlying trusts must be disclosed on the ROE by an overseas entity, where relevant.  However, such information is only available to HMRC and specified law enforcement and other authorities.  It is not publicly available.  ECCTA gives the Secretary of State power to make regulations permitting disclosure of information about trusts through an application process.  As yet, no such regulations have been published.

Transitional provision

For any overseas entity registered before 4th March 2024, additional information that must be added to the register to comply with the changes in relation to nominees and trustees above must be provided when the overseas entity complies with its first updating duty after 4 June 2024.

Other ECCTA measures

There are still a number of measures affecting the ROE that have not been brought into law.  Regulations that may be made by the Secretary of State in relation to disclosure of information about trusts are also awaited.  We will write further when further details are available.

This note gives a brief overview of the changes relating to the ROE coming into force in March. If you would like advice on how these or other changes may affect your company or trust, please get in touch with Liz Palmer, Head of Private Wealth or your usual Howard Kennedy contact.