UAE recently replaced Cabinet Decision No. 34 of 2020 with Cabinet Resolution No. 58 of 2020 on the Regulation of the Procedures Related to Real Beneficiaries (“Decision”).
Electronic money institutions are subject to the law on the prevention of money laundering and the financing of terrorism under which they must satisfy client identification obligations. One such obligation consists in identifying the Ultimate Beneficial Owners (UBO) of their clients.
Objective of Ultimate Beneficial Ownership
The Regulations require companies licensed or registered in mainland UAE or one of the commercial-free zones to create and maintain a register of their ultimate beneficial owners and to submit UBO information to the Registrar.
The objective of the Regulations is to regulate the requirement for corporate entities to maintain registers listing (i) the UBOs, (ii) the partners or shareholders of a company, and (iii) where applicable, nominee directors.
According to the new resolution, companies licensed or registered in the UAE (excluding in the financial free zones) must create and maintain a register of their ultimate beneficial ownership(“UBO”) and should submit UBO data to the relevant registrar or licensing authority (“Registrar”).
Exceptions of Ultimate Beneficial Ownership
The Regulations do not apply to companies that are directly or indirectly wholly owned by the federal or local government or their subsidiaries, as well as companies that are registered in the financial free zones in the UAE, namely the Abu Dhabi Global Market and the Dubai International Financial Centre.
Ultimate Beneficial Owners (UBOs)
The Regulations define UBOs as:
- Whoever owns or controls, through direct or indirect ownership, at least 25% of the entity’s shares or whoever has a voting right of at least 25 percent of the shares.
- If no UBO is identified in accordance with the above, or there is any doubt that any natural person identified as a UBO is the true UBO, the natural person who exercises control over the entity through other means will be considered as the UBO.
- If none of the conditions above are met, then a natural person who is responsible for the senior management of the entity will be considered as the UBO.
Certain information must be included in the register of UBOs. This includes without limitation, the name, nationality, place of birth, residential address, and travel ID card number (and date of issuance and expiry) of the
UBO. The reason why the individual is classified as a UBO and the date on which the person became a UBO or ceased to be a UBO (if applicable) must also be provided.
The requirement to maintain a register of UBOs does not apply to entities that are owned by:
(i) a company listed on a recognized stock exchange that is subject to disclosure requirements that ensure sufficient transparency of its beneficial owners;
(ii) a company wholly owned by such a listed company. The Regulations do not provide further information on recognized stock exchanges.
Partners & Shareholders
For the register of partners or shareholders, a company must maintain the details of its partners or shareholders as set out in the Regulations and update such register with any change occurring within 15 days from the date of the change.
The register of partners or shareholders must include certain information, including without limitation, the number of shares held by each partner or shareholder, the voting rights attached to such shares, and the date of acquisition of shares by each partner or shareholder. Information on each partner and shareholder (whether a natural or legal person) listed in the register must also be provided as set out in the Regulations.
The register of partners or shareholders must also include information on any partner or shareholder acting as a “trustor” or “nominee board member.” The Regulations define a “trustor” as a natural or legal person who transfers the management of their funds to a trustee by virtue of a deed.
A “nominee board member” is defined as a natural person who acts in accordance with the instructions of another person.
Deadlines for the submission of Ultimate Beneficial Ownership (UBO)
The filing deadline of the register of UBOs and the register of partners or shareholders of existing entities is 27 October 2020 or at the time of incorporation/registration of a new entity. The Registrar may request additional information beyond that required in the Regulations.
- Consultancy related to UBO declaration
- Maintenance of UBO register
- UBO record maintenance