The UAE has introduced new rules for private companies incorporated in the country in its attempt to develop into a highly transparent and sustainable economy. Recently, the Economic Substance Laws have significantly changed the company set-up in Dubai and now businesses are expected to conform with the new Ultimate Beneficial Ownership law. Cabinet Resolution No. (58) of 2020 governing Beneficial Owner Procedures has been adopted by the UAE Ministry of Economy. The Resolution sets additional criteria for the disclosure of beneficial owners by individuals. The key goal is to increase the integrity of UAE-licensed companies, as well as to establish efficient and sustainable executive and regulatory processes and procedures with regard to the valuable data of the holders.
Table of Contents
Who is an Ultimate Beneficial Owner (UBO)?
The natural person who owns or finally controls the company directly or indirectly through:
- Holding 25% or more equity of the company
- Having 25% or more voting powers of the company
- Appointing or dismissing most of the directors of the company.
- If more than a person is owning the shares or controlling the company, then all of them shall be treated as beneficial owners.
- If UBO is not known, or there is a suspicious about the UBO, then Natural Person who exercises control over the legal person (through other means) shall be deemed beneficiary
- If there is no UBO for the legal person in accordance with the above, the UBO shall be deemed to be the natural person who occupies the senior management position.
Basically, no one but the individual being who actually occupies the legal status is a beneficial owner. Economic Substance Control & Country by Country Regulation in the UAE includes a reference to the Ultimate Beneficial Holders.
Role & Responsibilities of Legal Person
- Legal Person should provide all the required details at the time of licensing & registration.
- It should clearly mention its trade name & address in the UAE in all correspondence and documents.
- Issue notices to Beneficial Owners where there is doubt on the real beneficiary.
- Maintain and provide the details on the Beneficial Owner in the Register and shall update the same within 15days of becoming aware of any changes.
- It shall keep and maintain the Register of Partners or Shareholders and must update the same within 15days of becoming aware of any changes.
- Furnish the Registrar with the data contained in the Register of Beneficial Owner and Register of Partners or Shareholders within 60days from the date of enactment of Decision
- Provide the data or documents as requested by the registrar and disclose the same with personnel or authorized agents.
Applicability of UBO Resolution
The Resolution applies to all entities licensed in the UAE, excluding the following:
- Entities in financial free zones (Abu Dhabi Global Markets and Dubai International Financial Centre);
- Entities that are directly or indirectly wholly owned by the Federal or Emirate government.
Under the resolution, companies are required to
- Disclose and maintain:
- a register of its partners/shareholders, including details of the ownership interests and voting rights held by each of them;
- a register of its Real Beneficiaries, including the reason why they are a Real Beneficiary and the date on which they became so; and
- a register of its directors and nominee directors;
- Appoint and disclose the details of a physical person residing in the UAE who is authorized to disclose the company’s data and information required under the resolution (“Authorized Agent”)
The role of the Authorized Agent is to serve as the primary contact for the business in the UAE, both for the submission of details and for the reception of notification by and from the qualified licensing authority. According to our interpretation, the Authorized Agent would not be listed on the company’s trade certificate. Instead, the jurisdiction of the Authorized Agent can be restricted to the dissemination of all the details and information required by the resolution.
How to Maintain the Ultimate Beneficial Owner (UBO) Register?
As per the Cabinet Decision, the companies registered in the UAE are required to create a UBO register that contains the following information on the Real Beneficiary,
- Full name, nationality and date, and place of birth, place of residence, and address
- Passport or ID number
- Date and basis on which the person became a UBO
- The date on which the person ceased to be a UBO
Corporations are obligated to constantly maintain the register updated. In addition, businesses shall notify the Registrar of any modification or adjustment to the details given within 15 days of such change or amendment. Apart from this, corporations must select an individual with whom the Registrar can communicate every disclosure.
Non-Compliance of the Law
Businesses are expected to comply with the regulations or face a list of penalties levied by the UAE Ministry of Economy (MOE). However, the MOE is still yet to announce a list of legal penalties. Failure to comply with any obligation set out in the Beneficial Owners Procedures Regulations may result in several liabilities for the company and its officers. In some cases, beneficial owners and shareholders will also be penalized for default, and daily penalties may continue to accrue if the default continues. Our consultants will help you avoid the following violations:
- Failure in keeping records of company beneficial owners
- Late submission or failure in providing information to Registrar of Companies regarding changes of company beneficial ownership
How Can Riz and Mona Consultancy Help?
Riz and Mona Consultancy will continue to follow closely the announcements issued by the Ministry of Economy and related licensing bodies, such as the Department of Economic Development (DED) in each Emirate, and we will provide clients with ongoing advice in accordance with the resolution. We can support businesses in the following ways:
- Organize registers of UBOs, Partners/Shareholders, and Candidate Directors/Managers (if applicable) in compliance with the resolution.
- Arrange to file with the authority.
- Maintain the related registers in a dedicated corporate secretarial repository on a continuous basis.
- Inform the responsible authority about any modifications or changes to the details given.
- Identify and compile the details needed to be reported in the registers.
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