The Register of Overseas Entities (ROE) requires overseas entities owning or buying property in the UK to provide information to the Registrar of Companies, including their “beneficial owners”. 

The ROE contains various regulation-making powers that allow the Secretary of State to prescribe further technical details of the requirements, including the operation of the Register. This is one of a series of essential regulations to be made under the Economic Crime (Transparency and Enforcement) Act and other statutory legislation such as the Companies Act 2006, to implement the Register.

The Statutory Instrument addresses some of the practical difficulties identified after commencement of the Register. It amends certain provisions relating to the verification of information in The Register of Overseas Entities (Verification and Provision of Information) Regulations 2022 (2022/725), specifically:

• Regulation 2(2) excludes certain information from being verified: where this relates to a government or public authority, the beneficiaries of certain pension trusts, and relating to updating and applications for removal where the information has already been verified.
• Regulation 2(3) and (4) allow a relevant person to verify information relating to beneficial ownership differently from other information.
• Regulation 2(5) replaces “close business relations” with a more precise phrase.
• Regulation 2(6) expands the scope of the information that must be retained by a relevant person.

The text of the amendments can be accessed here. 

In January 2023, the guidance was updated to include new sections on information required about trusts, the annual update duty, and sanctions for non-compliance to the Act.

ICAEW has long supported reforms to Companies House and the need for firms to provide clear, accurate information and has been working with Companies House to help it implement the changes. Its members will be at the forefront of delivering some of these. 

However, in its communications with members, government and other stakeholders, it has raised concerns about the ROE, specifically around the criminal liability firms may be subject to when offering their services for verification, as summarised in this Insights article. ICAEW has suggested that aligning the legislation with the requirements of the Money Laundering Regulations, or making the guidance of the Department for Business, Energy and Industrial Strategy (BEIS) statutory, could be ways to address this concern.

“While we welcome the acknowledgement by BEIS that the original ROE Regulations generated significant concern among firms, we do not believe that the amendment as it stands sufficiently addresses these concerns, particularly concerning strict legal liability for the provider of verification services,” says Mike Miller, ICAEW’s Economic Crime Manager. “This leaves firms providing verification services open to significant sanctions, even if there is no intention by the verifier to deceive. Given the nature and the expertise that is likely to be required to verify a wide potential array of material and information, it will be crucial for firms to consider if they have the requisite skills and experience to conduct the verification process.” 

ICAEW will continue to support the rationale of the ROE and has consistently reinforced the need to make Companies House controls stronger, with more accurate and verified information. This also applies to the ROE, but this must be conducted in a way that is practicable for firms to conduct. 

“We continue to work closely with our members, the sector generally and across government stakeholders towards the implementation of a system that provides accurate information to Companies House, reducing the threat to the UK from economic crime,” says Miller. “It must also work efficiently in practice, allowing a range of established firms to carry out reliable verification work without disproportionate legal burdens.”