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In Brief:

Cabinet Resolution No. (58) of 2020 regulating Beneficial Owner Procedures (the “Resolution”) came into effect on 24 August 2020 and replaced Cabinet Resolution No. 34 of 2020 issued earlier this year. 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.

The Resolution requires entities licensed 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. Whilst 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 that are directly or indirectly wholly-owned by Federal or Emirate government.

It is worth noting that there has been no reference to the information in the registers being made publicly available, it is anticipated that all information will be held and maintained for authorities use only.

Register of UBOs

• UBOs are natural persons who ultimately own or control or have the right to vote with a minimum of 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.
• 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.
• 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

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

Register of Partner / Shareholder

• 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 concept as this is a requirement outlined in the UAE Commercial Companies Law, as well as in respective Free Zone Companies Regulations. Although the Resolution requires additional information to be detailed (for example, voting rights).

Process to comply

• Prepare registers of the UBOs, Partners / Shareholders, and Nominee Directors / Managers (if applicable).
• 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.

The filing deadline of the Registers is sixty (60) days from the date of publication of the Decision i.e. 27 October 2020 or at the time of incorporation/registration of a new Entity. Any changes to the information contained therein must be updated within fifteen (15) days.

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.

How Parker Randall UAE can help you?

• Identifying UBOs of your company.
• Assisting in the preparation of the registers according to the registrars’ form/declaration.
• Assisting in the submission of the registers/declaration/declaration to the registrars/relevant authorities.