Ultimate Beneficial Ownership (UBO) Disclosure: New Compliance Requirement for UAE Companies

In its pursuit to evolve into a highly transparent and reliable economy, the UAE has implemented new regulations for the corporate entities incorporated in the country. Recently it was the Economic Substance Regulations that transformed the business setup in Dubai in a great way and now the companies are required to comply with the latest rules on Ultimate Beneficial Ownership. Through Cabinet Decision No. 58 of 2020, the UAE has updated the corporate compliance requirements regarding the real beneficiaries of the mainland, free zone and offshore companies. The disclosure requirement regarding the Real Beneficiary stems from the UAE’s pursuit to curb the financial crimes of money laundering.

As per this Decision, the companies registered in the UAE mainland or the free zones are required to maintain a register of their Ultimate Beneficial Owner (UBO) and submit it to the Relevant Authority. This means the companies are now required to submit the UBO information to the Registrar by 23 October 2020, (60 days from the date of the decision) or 60 days from the date of issuance of the company’s license. The companies in the mainland and the free zones should now assess their corporate structure for which they can avail the services of the best AML/CFT consultants in Dubai.

Who is an Ultimate Beneficiary or Real Beneficiary?

For the Register of Real Beneficiary, a UBO can be defined as,

  1. Any person who owns or ultimately controls the company through direct or indirect ownership
  2. Whoever owns at least 25% of the entity’s share capital or has 25% or more of the voting rights
  3. Whoever holds ownership powers through other means like the right of appointment or dismissal of Managers

If the UBO doesn’t fit any of these criteria or there is any lack of clarity over the person with final controlling power, then the physical person who holds control over the company through other means will be considered as the Real Beneficiary. If the entity is unable to determine a physical person as UBO, the physical person who holds the position of the person in charge of Senior Management will be the Real Beneficiary. Consult with the best AML/CFT consultants in Dubai for more insights about the UBO requirements.

What the Companies are Required to Do?

All companies in the UAE, both mainland and free zone must now keep at their office premises:

  1. Partners or Shareholders Register(PSR)
  2. Real Beneficiary Register (RBR)
  3. Register of Nominee Directors

How to Maintain the UBO Register?

As per the Cabinet Decision, the companies registered in the UAE are required to create a UBO register that contains the following information on the Real Beneficiary,

  1. Full name, nationality and date and place of birth, place of residence and address
  2. Passport or ID number
  3. Date and basis on which the person became a UBO
  4. The date on which the person ceased to be a UBO

Companies are required to keep the register updated constantly. Apart from this, the companies must notify the Registrar of any change or amendment to the information provided within 15 days of such change or amendment. In addition to this, the companies must designate a person with whom the Registrar can communicate about any disclosure.

Rules for Listed Companies

The companies that are listed in stock exchanges or companies that are owned by listed companies should rely on the disclosures they have already made to the stock exchanges. They are not needed to make separate notifications concerning the UBO.

Does the UBO Rules Apply for All the Companies?

The Cabinet Decision regarding the Real Beneficiary applies to all the entities in the mainland as well as the companies in the free zones except the following,

  1. Companies Registered in Financial Free Zones (DIFC, ADGM)
  2. Companies owned by the Federal government & its Subsidiaries

Real Beneficiary Law for Companies Under Liquidation

The Cabinet Decision also specifies how the UBO law applies to the companies under liquidation. If a company is under dissolution or liquidation, the official liquidator should provide a true copy of the updated UBO register to the Registrar within 30 days of the liquidator’s appointment.

Consequences of Not Complying with the Law

The companies are required to comply with the regulations or else they will face a list of sanctions imposed by the UAE Ministry of Economy (MOE). However, the MOE is yet to announce the list of administrative sanctions. Consult with the best AML/CFT consultants to avoid the sanctions caused by non-compliance.

AML/CFT Consultants in Dubai, UAE

The concept of disclosing UBOs of the companies was first introduced in the banking sector where the banks where the companies were required to reveal information about their UBO during the bank account opening process. In line with this, certain free zones (JAFZA, DMCC) had also implemented the requirement of UBO disclosure during the process of company formation in the UAE. Yet, the majority of the licensing authorities in the UAE have not pushed for such requirements until the release of the Cabinet Resolution No. 58 of 2020.

Now, after the Decision, the disclosure requirement has been extended to the companies incorporated in the mainland, offshore as well as commercial-free zones (except the financial free zones). The new regulations require the corporate entities to maintain a UBO register and submit the information about the Real Beneficiary to the Registrar. This would make the companies assess their ownership structure for which the best AML/ CFT consultants in Dubai such as Jitendra Business Consultants (JBC) provides expert assistance. JBC has a team of highly qualified business setup consultants and Chartered Accountants who will ensure that the entities are in full compliance. JBC train and guide the staff of the companies to maintain the Real Beneficiary Register (RBR) and Partners or Shareholders Register(PSR). JBC also help the business owners in maintaining the registers on their behalf and provide secretarial services to maintain and update the registers on a regular basis and comply with the regulations at the time of incorporation, renewal and making any amendments.

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