Cabinet Resolution No. (58) of 2020 regulating Beneficial Owner Procedures (the “Resolution”) came into effect on 28 August 2020 and replaced Cabinet Resolution No. 34 of 2020 issued earlier this year The Resolution requires entities licensed in the UAE (unless exemptions apply) to prepare and file a Ultimate Beneficial Owner (“UBO”) register, Nominee Director register (if applicable) and a Partners or Shareholders register, with the relevant authority within sixty (60) days from the date the Resolution came into effect, being 27 October 2020, or by the date the entity is established Entities in financial free zones (Abu Dhabi Global Markets and Dubai International Financial Centre)
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, etc.).
Entities must notify the relevant authority of any change or amendment to the information provided within fifteen (15) days of such change or amendment.
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.
1. At the time of their registration and licensing, companies are expected to provide all required details accurately.
2. Companies should share their trade name and their official address in the Emirates on all their documents.
3. If there is a doubt about who is the real beneficiary, the company should intimate this to all its beneficial owners.
4. Once the UBO has been identified and declared, companies must provide relevant details of the UBO in the register. They must also make sure to keep the register updated. Any changes that a company becomes aware of should be amended in the register within 15 days after the change came to notice.
5. Companies should provide all data regarding their UBO (and other requirements of the resolution) no later than 60 days after the enactment of cabinet resolution 58. Or, no less than 60 days after the registration and licensing of a company has been completed.
6. Provide information to the registrar as required. The same information must be shared with authorized personnel.
7. Any changes made in the data shared with the registrar must be intimated to the registrar within 15 days of making the changes.
It is advisable to seek the expert help from third parties, that can make UBO verification easier. Once a UBO has been identified, a company must gather the necessary information and compile the Register of Beneficial Owner so that it may be submitted to the authorities.
The declaration process involves identifying a UBO and then gathering data related to them that is then entered into the UBO register. The resolution requires legal entities to produce and maintain the following:
1. Register of Beneficial Owner
2. Nominee Board Member information
3. Register of Partners or Shareholders
The Register of Beneficial Owner will contain updated information about a company’s identified UBO. The following data of the UBO must be entered in the register:
1. Full name, place and date of birth, and nationality
2. Residential address(es) to which notices shall be sent.
3. ID card or passport number, issuing country, and the issue date and expiry date.
4. The date and the basis on which the individual became the company’s UBO.
5. The date on which the individual stopped being the company’s UBO.
A person or party that owns or controls more than 25% of a company’s shares and/or voting rights. It is also the person or party that ultimately benefits from any transactions made by a company. A UBO’s control or ownership of a company can be direct or indirect. The Resolution (cabinet resolution 58) has provided clear-cut application guidelines which are to be followed by all the applicable entities.
1. According to the resolution, the UBO shall be the person who, directly or indirectly, owns and controls a company. Individuals with ownership of at least 25% shares and voting rights of a company, or someone with the power to dismiss and appoint a majority of a company’s directors shall be considered as a UBO.
2 In case there is no natural person who meets the above-mentioned conditions, then the UBO shall be someone who has control over a company through other means.
3. If no natural person can be identified who meets the conditions stated in the first two points, a person appointed to a higher management position in the company will be considered as the UBO.
4. If the conditions stated for identifying a UBO are shared by more than one person (e.g. 25% of voting rights are shared by two individuals) then all of them will be identified as joint owners of the ratio.
Enterprise House can assist you in maintenance and preparation of the UBO, Shareholders and Nominee directors register and can arrange filing to the relevant authorities.
Please note that legal entities that fail to comply with this law will face repercussions. They will have to face sanctions placed by the Ministry of Economy. Once these sanctions have been placed, the legal entity will have to submit an appeal that will then be processed before the sanction(s) can be lifted.