LMA issues updated ROE condition precedent

The LMA has recently updated its guidance note on the Register of Overseas Entities (ROE) regime, suggesting that the ROE condition precedent wording should be updated as follows:

“(a) A certificate of an authorised signatory of the Company certifying that:

(i) each Borrower has complied with its obligations under the Economic Crime (Transparency and Enforcement) Act 2022 (the ECTEA) and its duty to provide information under section 1092A of the Companies Act 2006 (and there are no outstanding notices under that section), in respect of the register of overseas entities referred to in section 3 of the ECTEA (the register); and

(ii) the last day of the current update period (as defined in section 7 of the ECTEA) is a date falling no earlier than two months after the date of the Security Agreement; and 

(b) a copy of the register in respect of each Borrower certified by an authorised signatory of the Company to be complete, correct and up to date as at a date no earlier than the date of this Agreement.”

The LMA guidance note recommends that paragraph (a)(ii) should be included where an overseas entity is acquiring a qualifying UK property as part of the transaction. 

We expect this updated CP will become market practice and all parties should be aware of the timing issue that this may create if the ROE update period is due to expire within two months of completion.

Lenders may want to update precedent documents in addition to any documents currently in negotiation. 

Borrowers should be alive to the timings and either prepare to file the ROE annual update early or negotiate the timings with the lender.  

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