Updated: Nov 21, 2020
New regulation in respect of disclosing the Ultimate Beneficial Owners (UBO) of businesses have been implemented in the UAE via Cabinet Decision No 58 (Regulation).
The UBO regulation emanate from Anti Money Laundry regulations and it aims to enhance transparency and to develop effective regulatory mechanisms and procedures in this regard.
What is required?
The new Regulation requires businesses in the UAE to prepare, maintain, and submit the following to their licensing authorities (Free Zones and mainland):
Ultimate Beneficial Owners register
Partners or Shareholder register
The new regulations apply to all entities in the UAE except:
Financial Free Zones entities (ADGM & DIFC)
Wholly owned government entities
Who is the Ultimate Beneficial Owner (UBO)?
The UBO is the natural person who has the ultimate ownership or control over an entity directly or indirectly.
Reference to the Regulation, the UBO can be determined as follows:
A natural person who ultimately controls or owns 25% or more shares of an entity directly or indirectly or has a voting right of 25% or more. Control can be through other means like the right to appoint or dismiss the majority of managers.
If no natural person can be determined as per the condition (1) above, then the natural person who exercises control over the legal entity through other means will be considered as the UBO.
If no natural person can be identified as per the conditions (1&2) above, the top manager in the entity will be considered as the UBO.
For most companies in the UAE the UBOs will be the shareholders as shown in the articles of association. However, it could be challenging to determine the UBOs of companies that are partially or wholly owned by other companies. The more complex a group structure is, the more difficult to identify the UBOs and consistently maintain their register.
The UBO register
Entities must maintain and file a UBOs register which contains the following information, and must be continuously updated for any changes within 15 days of that change:
Name, nationality, date and place of birth
Address and place of residence where notifications must be sent
Travel document and ID’s number, country, date of issuance and expiry
The basis on which the person becomes a UBO, and the date of acquiring such capacity
The date on which the person ceased to be a UBO.
The Shareholders register
Entities must maintain and file shareholders or partners register which contains the following information, and must be continuously updated for any changes within 15 days of that change:
Number and type of shares owned, and the associated voting rights
The date on which the person becomes a shareholder or partner
For natural persons: name, nationality, address, place of birth, work address, ID and travel document copies.
The Nominee Directors register
A Nominee Director is any natural person who act according to other person’s instructions or will.
Nominal Directors/managers must present the same information as the shareholders above to the entity within 15 days of their appointment.
Reference to the Regulation, the deadline of filling the registers is 27 October 2020 for existing entities and the date of establishment for new businesses.
Some Free Zones already have the UOB requirements in place with a process to file the information such as DMCC and DDA. However, other Free Zones and onshore authorities like Department of Economic Development (DED), are yet to pronounce their mechanisms.
Businesses in the UAE have to add a compliance procedure and process that effectively help to maintain an up-to date registers of UBO, shareholders, and Nominee directors and to file those registers to the relevant licensing authority at the right time.
How can Audiix help?
Review your corporate structure and perform accurate UBO identification, as per the Regulation, or act following a change of the entity’s UBOs or shareholders.
Maintain all required registers in a cloud based secretarial database dedicated to your business, accessible anytime from your computer or mobile.
Assist in filing of all mandatory submissions to the relevant authority
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