The 31 January 2023 deadline for registering on the Register of Overseas Entities (the ROE) is fast approaching. By that date, overseas entities holding qualifying UK real estate must have provided information on their beneficial ownership to Companies House, which will then make much of that information publicly available.
In the rush to register by the deadline (and to avoid criminal sanctions for non-compliance), an overseas entity might not have given much thought to what might happen if, in the future, the entity ceases to hold any qualifying real estate.
In this case, the entity can apply under s. 9 of the Economic Crime (Transparency and Enforcement) Act 2022 (ECTEA), the legislation that governs the ROE) for “removal from the list of registered overseas entities”. The entity might therefore conclude that information about its beneficial owner(s) would no longer be publicly available once it has been removed from the register.
However, the explanatory note to ECTEA suggests that a successful application for removal doesn’t actually lead to the removal of any information:
“The effect of being removed from the list of registered overseas entities is that an overseas entity will no longer be required to comply with the updating duty [i.e. the duty of all registered overseas entities to update their beneficial ownership information every 12 months] and the entry on the register relating to that entity will be comprised of historic information previously provided, until such time as those records are transferred to the Public Record Office.”
On the contrary, this explanatory note says that all that is “removed” is the ongoing duty to update information. Any beneficial ownership information the entity has previously provided to Companies House will remain publicly available on the ROE until it is eventually transferred to the Public Record Office (where it will also remain available for public inspection). This is similar to the operation of other corporate registers in the UK; for example, records relating to dissolved UK companies are eventually transferred to the Public Record Office, after being “removed” from Companies House records.
This is not immediately obvious from the wording in the legislation – nowhere in ECTEA is there any qualification or proviso on the word “removal”, so it would be natural to assume that what is meant is total removal of all records from the ROE.
However, we would expect that at least until any further clarification is published, Companies House will follow the approach set out in the explanatory note, on the basis that this is consistent with the intention of Parliament. (A House of Commons briefing paper, published when ECTEA was making its way through Parliament, comes to the same conclusion.)
A nuanced reading of the legislation might also lend support for this conclusion. In particular, a distinction could be drawn between the reference in s. 9 ECTEA to an entity’s “removal from the list of registered overseas entities” and removing “material […] from the register” (which the registrar can do under s. 28 ECTEA in respect of information which is, amongst other things, deemed “unnecessary”, and which the court can order under s. 30 ECTEA in relation to inaccurate information).
That said, the provisions of ECTEA relating to applications for removal only came into force in October 2022, and new Department for Business, Energy and Industrial Strategy guidance published on 12 January 2023 does not flesh these provisions out. It may be that the Government and Companies House themselves are still figuring out the practical effects of the provisions, which would be unsurprising given that ECTEA was fast-tracked through Parliament following the invasion of Ukraine. Watch this space for further developments.