The Register of Overseas Entities — an explainer
Foreign organisations looking to buy or sell land or property in the UK now need to be listed on the new Register of Overseas Entities (ROE).
The ROE aims to improve transparency around property ownership, not least making it easier to prevent financial crimes such as money laundering.
The ROE’s background in Scotland
In an increasingly globalised world, it’s far from unusual for organisations to operate across multiple countries.
The UK-wide, public register — which is free to search — came into effect at the end of last year as part of the Economic Crime (Transparency and Enforcement) Act 2022 and is operated by Companies House.
Overseas entities holding land or leasing land for more than 20 years in Scotland should have registered by the end of 31 January this year if the title to the land (or lease) was added to the Land Register of Scotland between 8 December 2014 and 31 July 2022.
The same rules apply to long leases of more than 20 years and when organisations assign long leases.
Now the transition period has passed, non-compliance can result in criminal sanctions, including imprisonment for every officer of the entity who is in default, or penalties of up to £2,500 a day.
The rules apply to a wide range of organisations including companies, partnerships, and other types of legal entities registered outside the UK. This includes companies incorporated in the Channel Islands or the Isle of Man.
If you’re based outside of the UK and are looking to register property in the Land Register of Scotland you’ll need to have an ‘overseas entity ID’, which you’ll receive when you’re added to the ROE.
To do that, you’ll need to provide basic information such as your name, address, and the organisation’s legal structure, as well as information about the owners and officers who’ll benefit from any transaction.
Once they’re on the database, you’ll need to make sure the information is updated every year, or whenever there is a significant change in the ownership or management structure.
UK-registered organisations are exempt, as well as those meeting certain conditions.
At the time of writing, the government hasn’t put regulations in place to specify exactly what kind of entities the rules won’t apply to. That said, there are certain conditions where people can be exempt from being registered as a beneficial owner.
For example, if someone doesn’t hold any interest in the overseas entity other than through one or more legal entities.
In implementing the ROE, the UK Government is aiming to prevent illicit activities and ensure inward investment is conducted in a responsible and transparent manner.
As well as the overseas entities considering the ROE for conveyancing transactions, the Register of Persons Holding a Controlled Interest in Land (RCI) also applies to Scotland. My colleague partner Gary Webster recently wrote a blog post about this.
Registration in the ROE does not mean you don’t have to register in the RCI. And, in some cases, it may be necessary to be listed on both.
The Department for Business, Energy and Industrial Strategy has produced ROE guidance. The legislation can be complex so if you’re unsure of your obligations, it’s best to seek clarification sooner rather than later (our team can help with that, of course).