The Act provides for a six-month transition period so all overseas entities must have complied with the requirements before 31 January 2023. However, it is important to note that an overseas entity will need to be registered on the ROE before an application can be made to register an acquisition in any of the UK land registers on or after 5 September 2022.
Therefore, any Jersey entities who are currently actively considering acquiring a relevant interest in land should ensure their application to be registered on the ROE is done as soon as possible from 1 August 2022 to account for any delays or teething issues.
On and from 1 February 2023, all Jersey entities owning land in the UK will need to be registered on the ROE before any application or dealing made at the relevant Land Registry in respect of such land will be successfully registered.
WHAT IS A “RELEVANT INTEREST IN LAND”?
An overseas entity has a “relevant interest in land” when:
- in England and Wales – such entity (i) owns freehold property or (ii) has the benefit of lease for a term of more than seven years. The overseas entity must have been registered at the Land Registry as the proprietor of that interest on or after 1 January 1999;
- in Scotland – such entity (i) owns land, (ii) is the tenant under a lease for more than 20 years or (iii) took an assignment of a lease and such interest was registered in the Land Registry of Scotland on or after 2014; and
- in Northern Ireland – such entity (i) is the (registered) owner of a freehold estate in land, (ii) is the tenant under a lease for more than 21 years or (iii) took an assignment of a lease and the relevant disposition, lease or assignment was registered in the Land Registry of Northern Ireland on or after the date when those parts of the Land Registration Act (Northern Ireland) 1970 come into force.
WHAT INFORMATION NEEDS TO BE PROVIDED?
The Act specifies what information needs to be provided to Companies House for an application to the ROE. Broadly speaking, three lots if information will need to be provided:
- information on the overseas entity itself (including (but not limited to) name, country of incorporation/formation, registered office and what public register (if any) it is registered on as well as its registration number in that register);
- information on all registrable beneficial owners of the overseas entity – broadly speaking, a person who holds more than 25% of the shares or voting rights in the overseas entity, has the right to appoint/remove a majority of the board of directors of the overseas entity or is otherwise able to exercise significant influence over the overseas entity; and
- in certain cases, information on all managing officers of the overseas entity.
Jersey trustees of trusts (including JPUTs) will need to be registered and certain information regarding the trust and its beneficiaries will need to be provided with an application (although such information relating to the trust and the beneficiaries will not be shown on the register).
The information provided in respect of an application will need to be verified by a “supervised agent” who may be from a credit institution, financial institution, auditor, insolvency practitioner, external accountant, tax adviser, independent legal professional, trust or company service provider, estate agent or letting agent. All supervised agents will need to obtain an assurance code from Companies House before they can verify the information.
PENALTIES AND CONSEQUENCES
Penalties for non-compliance may include unlimited fines and there are also daily fines of £2,500 for continued contravention which can be levied against the entity and every officer of that entity. The overseas entity will also be prohibited from dealing with such land until they have completed their registration on the ROE.
Entities must also register (within the six month transitional period) on the ROE if they disposed of land on or after 28 February 2022.
CONSIDERATIONS
Jersey entities should be mindful of the Act when looking to acquire or sell UK property and, if acquiring property from another overseas entity, ensure the contractual arrangements contain provisions dealing with the successful registration on the ROE prior to completion. Jersey entities should also consider the impact on existing contractual arrangements, such as agreements for lease.
In addition, the applicable Land Registry will not, from 1 February 2023, register a charge (or mortgage) over such property unless an overseas entity has completed its ROE registration. A failure to complete a ROE registration within the six-month transitional period will restrict an entities’ ability to raise finance in respect of such property. Jersey entities with existing facilities due to expire around that time will need to ensure that they have completed their ROE registration to ensure there are no issues when it comes time to refinance.
As Jersey entities are already under strict obligations to identify their ultimate beneficial owners we do not expect there to be much difficulty in compliance. The main obstacle is ensuring that applications are made in a timely manner so as to avoid any delays given the large number of applications to be made in the upcoming months.
For further information, please contact:
James Gaudin, Partner, Appleby
jgaudin@applebyglobal.com
