Corporate Law Update: 2 - 8 September 2023
- The Economic Crime and Corporate Transparency Bill enters its final stages in Parliament
- Overseas entities can now apply to be removed from the Register of Overseas Entities
- New accounting obligations to come into effect for UK companies listed in the US or Japan
Economic Crime Bill enters final stages in Parliament
The Government’s Economic Crime and Corporate Transparency Bill has entered its final stages in Parliament.
The Bill was debated in the House of Commons this week following amendments made by the House of Lords before Parliament’s summer recess. Those included both amendments sponsored by the Government to refine the Bill, as well as non-Government amendments.
Following votes in the House of Commons, certain non-Government amendments have been removed.
For UK companies, this includes a proposed requirement to include details of trusts over UK company shares in a company’s register of members. This amendment, as drafted, posed technical difficulties and would have conflicted with other provisions of UK company law.
In relation to the UK’s Register of Overseas Entities (ROE), the Commons removed a proposed clause requiring an overseas entity to update details of its beneficial owners within 14 days of a change or before transacting in registered land. Again, these proposals, as drafted, posed certain difficulties and could have created certain risks for third parties dealing with an overseas entity.
The Commons also removed a proposed requirement to make all trust information on the ROE automatically public. However, Government proposals to expand the range of trusts that are registrable under the ROE, including certain trusts over land itself, will proceed.
Other measures set out in the Bill are also on track to become law, including mandatory identity verification for UK company directors, restrictions on who can deliver documents to Companies House, a new offence of failing to prevent economic crime, and the ability to bring criminal proceedings against corporate bodies for certain offences committed by their senior managers.
The Bill now returns to the House of Lords, which can (in theory) introduce new amendments or reintroduce rejected amendments, as part of the “ping pong” process.
We will report in more detail on the changes to be introduced by the Bill once it becomes law.
Overseas entities can now apply to be removed from the Register of Overseas Entities
Companies House has updated its guidance on the Register of Overseas Entities (ROE) to confirm that an overseas entity can now apply to remove itself from the register.
A non-UK legal entity must register on the ROE if it is, or wishes to become, the registered proprietor of certain types of UK real estate. The entity must provide details of its beneficial owners and, in some cases, its managing officers and any trusts in its ownership structure. Information on the overseas entity itself, its beneficial owners and its managing officers will be publicly available at no cost.
If an overseas entity ceases to be the registered proprietor of any land in the UK, it can apply to be removed from the ROE. This will not remove the entity’s records from public view, but it will mean that the entity is no longer required to provide annual updates to Companies House.
However, once an entity is removed from the ROE, it will not be able to become the registered proprietor of UK real estate unless it re-registers.
Strictly speaking, at the time of writing, the legislation allowing an entity to be removed from the ROE is not yet in force. However, Companies House has confirmed that an overseas entity should email enquiries@companieshouse.gov.uk if it wishes to be removed.
Read the Companies House guidance on the Register of Overseas Entities
New accounting obligations for UK parent companies listed in the US or Japan
New regulations have been made which will affect parent companies that are incorporated in the UK but listed on a securities exchange in Japan or the United States.
Under existing regulations, these companies have four years from their date of incorporation to ensure they prepare their group accounts using UK GAAP or International Accounting Standards (IAS).
The new regulations will supplement this to require these companies to disclose, in a note to their accounts, their date of incorporation and the number of years they have left to transition to preparing their accounts under UK GAAP or IAS.
The new regulations apply from 29 September 2023.
