In its pursuit to evolve into a highly transparent and reliable economy, the UAE has implemented new regulations for the corporate entities incorporated in the country. Recently it was the Economic Substance Regulations that transformed the business setup in Dubai in a great way and now the companies are required to comply with the latest rules on Ultimate Beneficial Ownership. The UAE Ministry of Economy has enacted Cabinet Resolution No. (58) of 2020 regulating Beneficial Owner Procedures. The Resolution introduces new requirements for entities to disclose their beneficial owners. The main purpose is to enhance the transparency of entities registered in the UAE, as well as to develop effective and sustainable executive and regulatory mechanisms and procedures in respect of beneficial owner data.
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, a beneficial owner is no one but the natural person ultimately holding the legal position. The reference to Ultimate Beneficial Owner can be found in Economic Substance Regulation & Country by Country Regulation in the UAE.
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 Beneficial Owner in the Register and shall update the same within 15days of becoming aware of any changes.
- It shall keep and maintain 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 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 purpose of an Authorized Agent is to act as the primary contact for the company in the UAE, both for the submission of information and for the receipt of the notification by and from a relevant licensing authority. According to our understanding, the Authorized Agent will not be named on the trade license of the company. Instead, the authority of an Authorized Agent can be limited to disclosing all data 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
Companies are required to keep the register updated constantly. Apart from this, the companies must notify the Registrar of any change or amendment to the information provided within 15 days of such change or amendment. In addition to this, the companies must designate a person with whom the Registrar can communicate about any disclosure.
Non-Compliance of the Law
The companies are required to comply with the regulations or else they will face a list of sanctions imposed by the UAE Ministry of Economy (MOE). However, the MOE is yet to announce the list of administrative sanctions. Failure in abiding by any obligation set out in the Beneficial Owners Procedures Regulations can attract several liabilities for a company and the company officers. In certain cases, the beneficial owners and shareholders will also get penalized for default and daily penalties can continue accruing if the default continues. Our consultants will help you avoid committing 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 closely monitor the announcements from the Ministry of Economy and relevant licensing authorities such as the Department of Economic Development (DED) in each emirate and we will provide clients with continuing guidance on compliance with the resolution. We can assist companies in the following areas:
- Prepare registers of the UBOs, Partners / Shareholders, and Nominee Directors / Managers (if applicable), in accordance with the Resolution.
- Arrange to file with the authorities.
- Maintain the relevant registers on a dedicated company secretarial database on an ongoing basis.
- Inform the relevant authority of any changes or amendments to the information provided.
- Identify and compile the information required to be disclosed in the registers
Contact us today to book your appointment.