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Beneficial Owner (UBO) procedures and compliance- Compliance Alert UAE Cabinet Decision No: (58) of 24 August 2020

Oct 25th ,2020 / Haroon Juma / Economic Substance Blogs

 

 

Background

The UAE Ministry of Economy has enacted Cabinet Resolution No. (58) of 2020 regulating Beneficial Owner Procedures (the “Resolution”) coming into effect on 28 August 2020 and replaced Cabinet Resolution No. 34 of 2020 issued earlier this year.

The Resolution introduces new requirements for entities to disclose its beneficial owners. The main purpose is to enhance 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.

Further Details

The Resolution requires entities licenced in the UAE (unless exemptions apply) to prepare and file an Ultimate Beneficial Owner (“UBO”) register, Nominee Director register (if applicable) and a Partners or Shareholders register, with the relevant authority within sixty (60) days from the date the Resolution came into effect, being 27 October 2020, or by the date the entity is established.

Certain Free Zones have already implemented rules and processes to file UBO data (e.g. the Dubai Development Authority and the Dubai Multi Commodities Centre), further guidance from a number of other Free Zone authorities and the Department of Economic Development (for onshore entities) is expected in relation to the filing mechanisms.

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);

and

  • Entities which are directly or indirectly wholly owned by Federal or Emirate government.

It is anticipated that all information will be held and maintained for authorities use only.

Requirements Imposed By The Resolution

Register of UBOs

  1. UBOs are natural persons who ultimately own or control or have the right to vote with minimum 25% shareholding of the company, whether through direct or indirect ownership or who have the right to appoint or dismiss the majority of the Directors / Managers

 

  1. If no natural person satisfies the condition above, then any natural person who exercises control over the company through other means shall be deemed as the UBO.

 

  1. If no natural person satisfies both conditions above, then a natural person who is responsible for the senior management of the company will be deemed as the UBO.

 

Register of Nominee Director / Manager

  1. Details of Directors / Managers acting in accordance with the instructions of another person.

 

Register of Partner / Shareholder

  1. The number of ownership interests held by each Partner or Shareholder and the voting rights attached to such ownership interests and the date of acquisition of ownership interests. Entities will need to assess who constitutes a UBO and consider whether anyone is a nominee Director / Manager.

The Register of Shareholders / Partners is not a new requirement, this is a requirement outlined in the UAE Commercial Companies Law, in addition to respective Free Zone Companies Regulations. This Resolution requires additional information to be detailed (for example, voting rights).

Entities must notify the relevant authority of any change or amendment to the information provided within fifteen (15) days of such change or amendment.

If entities do not comply with the Resolution, the UAE Ministry of Economy may impose sanctions on those entities. The list of administrative sanctions is yet to be issued.

 

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