With an ever changing regulatory landscape our “What might I have overlooked” articles provide a reminder of some recent statutory changes that may not have seemed relevant at the time but which may come into play as your business evolves. In this article we consider the Economic Crime (Transparency and Enforcement) Act 2022 and the National Security & Investment Act 2021
Economic Crime (Transparency and Enforcement) Act 2022 – the Register of Overseas Entities
The Register of Overseas Entities (“ROE”) went live on 1 August 2022. Introduced by the Economic Crime (Transparency and Enforcement) Act 2022, it requires overseas entities owning property in the UK to register certain information at Companies House including details of beneficial owners.
The Act applies to non-UK incorporated companies and to freehold interests as well as leases for more than 7 years in England and Wales (separate rules apply in Scotland and Northern Ireland).
Where the entity already owns property in the UK (acquired after 1 January 1994 in England and Wales, after 8 December 2014 in Scotland and 5 September 2022 in Northern Ireland), they were required to submit their application for registration before 1 February 2023. The Act also captures dispositions of property made since 28 February 2022.
There are serious sanctions for non-compliance including fines of up to £2,500 per day or a prison sentence of up to 5 years. There are also restrictions when buying, selling, transferring, leasing or charging property or land in the UK if not registered.
Whilst Companies House has written to relevant companies to notify them of the requirements, one area to be alive to is reviewing the position of overseas companies which your organisation may have recently acquired. In those cases it is important to check whether the acquired company has any relevant property holdings in the UK that may trigger a requirement to register.
National Security & Investment Act 2021
The National Security & Investment Act 2021 came into force on 4 January 2022. It allows for the government to scrutinise certain acquisitions in 17 sensitive areas of the economy and to intervene in appropriate cases by imposing conditions on the acquisition or to potentially block it. The rules apply not just to acquisitions of UK registered entities but also those which carry on activities in the UK or supply goods or services to people in the UK.
The 17 areas in scope are:
Critical supplies to government
Military and dual-use
Satellite and space technologies
Supplies to the emergency services
The rules apply not just to 100% acquisitions but also in other circumstances and whether an acquisition is notifiable will depend on the level of control being acquired and whether it relates to the acquisition of an entity or an asset.
It is critical to consider the implications of the Act if your organisation is considering acquiring an entity or asset connected with any of the 17 areas listed above. Even if only increasing the stake in a business in which it is already a shareholder or undergoing a corporate restructure which results in there being a change in the corporate chain with no change in the ultimate owner, the Act may still be applicable.
Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.