On August 28, 2020, the United Arab Emirates (UAE) published Cabinet Decision No. 58/2020 on the Regulation of Procedures Related to Real Beneficiaries, which replaces Cabinet Decision No. 34/2020. The regulations may affect any business and entity registered or licensed in the UAE and should not be ignored.
The document outlines what is required of UAE businesses in order for the UAE to effectively implement anti-money laundering procedures and combat terrorism financing and the financing of unlawful organisations.
It requires that all UAE-based businesses or persons licensed or registered in the State, including commercial free zones, provide information on the Ultimate Beneficial Owner(s) (UBOs) of said entities plus additional information regarding company directors, managers, shareholders and other relevant members.
This includes the preparation and filing of an Ultimate Beneficial Ownership (UBO) register, a Nominee Director register (if applicable), and a Partners or Shareholders register. These documents must be prepared and filed no later than 60 days from the date that the Cabinet Decision came into effect, making the deadline October 26, 2020. New business entities that are not currently registered must prepare and file the documents on the date that they are established.
The new regulations are in furtherance of UAE Federal Decree-Law No. (20) of 2018 on Anti-money Laundering and Combating of the Financing of Terrorism and Financing of Illegal Organisations.
Entities Excluded From The Regulations Include:
Businesses and entities in the financial free zones that include Abu Dhabi Global Markets (ADMG) and Dubai International Financial Centre (DIFC). These zones have their own rules in place regarding UBO registers and other Real Beneficiary provisioning.
Any businesses or entities that are wholly owned, whether directly or indirectly, by the Federal or Emirate government.
The regulations also exclude some exchange-listed entities licensed in the UAE that may be exempt from certain rules due to the strict UBO requirements that are already in place for these types of businesses.
On or before October 26, 2020, all business entities licensed or registered in the United Arab Emirates and not part of the excluded zones must prepare and file the following records relating to Real Beneficiaries: Ultimate Beneficial Owner (UBO), Register of Nominee Directors/Managers, and Register of Partners and Shareholders.
Records must be filed with the necessary registrar and licensing authorities responsible for supervising trade and business entities in the UAE.
Failure to register and file the reports in the given time frame may result in administrative sanctions and/or penalties. Specific details pertaining to sanctions and/or penalties require further clarification at this time.
Further details on the various types of information required:
Ultimate Beneficial Owner (UBO)
A UBO is defined as any natural persons or persons with a minimum 25% shareholding of a company, in the form of direct or indirect ownership, control, or voting rights, or those with the right to appoint or dismiss the majority of company leadership.
If no UBO can be identified by these conditions, any natural person who exercises control over the company by any means will be deemed a UBO. Failing that, any natural person responsible for senior management of a company will be deemed UBO.
Register of Nominee Director
This includes all natural persons that are Directors and/or Managers within a company or entity acting in accordance with instructions of another person.
Register of Partners and Shareholders
This includes the number of ownership interests held by each partner or shareholder in the company. Details must include any relevant voting rights attached to the ownership and the dates of acquisition.
It is a requirement that this information is prepared and maintained by all business entities licensed within the UAE. The information must be submitted to the relevant licensing authorities, typically the Department of Economic Development (DED) within the relevant Emirate.
These authorities are under obligation to maintain the confidentiality of the information supplied. It is understood that no ownership information will be published on company licenses or disclosed to the public in any way.
Following the October 26, 2020, deadline, UAE registered entities must continue to adhere to requirements to maintain and notify regulators of any changes to their beneficial owners, directors, managers, partners, and shareholders.
All UAE-licensed entities that aren't exempt from the new regulations will need to assess which natural persons fit these criteria and provide all necessary information as detailed above before the deadline on October 26, 2020.
The Registrar must be notified of any updates, additional information or changes to existing information within 15 days of the change.
In regards to companies going through dissolution or liquidation, the appointed liquidator is required to provide the updated information to the Registrar with 30 days of appointment.
Each register requires that all relevant details are kept up to date throughout the life of the entity and for a 5-year period following dissolution, liquidation, or re-registration. All necessary precautions must be taken to ensure that details are accurate and kept safe from damage, loss, or destruction.
Entities are also required to provide the contact details of a UAE resident that has been appointed as an officer in charge of managing the upkeep of records.
Entities that do not provide the information or are found to be non-compliant with the regulations may have administrative sanctions or penalties imposed upon them by the UAE Ministry of Economy. Specific details of said penalties and/or sanctions have not been provided at this time.