Update to Beneficial Owner Regulations in the United Arab Emirates- October 2020

On 24 August 2020, the United Arab Emirates (UAE) Cabinet issued Cabinet Decision No. 58 of 2020 (the Resolution) on Regulating the Beneficial Owner Procedures, replacing Cabinet Decision No. 34 of 2020.

The Resolution came into effect on 28 August 2020, and in recent days, the respective regulatory authorities of the applicable jurisdictions have unveiled their guidelines and procedures for compliance with the Resolution.

The Resolution seeks to introduce a beneficial ownership register amongst the onshore mainland and non-financial free zone jurisdictions in the UAE, unifying and regulating the disclosure and register requirements. Corporate entities incorporated or licensed in the above jurisdictions are required to create, maintain, submit and update the register of their beneficial owners, shareholders and nominee directors, where applicable, to their respective Registrar(s). However, companies directly or indirectly wholly owned by the federal government or local government or their subsidiaries, and entities incorporated in the financial free zones of Abu Dhabi Global Market (ADGM) and Dubai International Financial Centre (DIFC) are exempted from the Resolution.

Few key points regarding the Resolution to note as under,

The deadline for a submission of the ultimate beneficial owner (UBO) details with the relevant Registrar is 27 October 2020.
The existing UAE Commercial Companies Law guidelines for a shareholder register is further enhanced and complemented with an update to the specific information to be maintained with regards to the shareholder(s).
UBOs are defined as any natural person who, directly or indirectly, ultimately controls or owns 25% of the shares or has the voting rights of at least 25% of the shares, or the rights to appoint or dismiss the majority of its directors.
If no person(s) is identified as meeting the criteria or if there are doubts as to the identity of the beneficial owner, the UBO shall be any natural person(s) who controls, manages and or administers the entity.
Should the company be unable to identify any natural persons per the above Points, the senior manager of the company shall be considered as the UBO.
The Resolution introduces a guideline for maintaining a register for information related to nominee director(s) or manager(s) that act in accordance with the guidelines, instructions or will of another person(s).
Sanctions and penalties may be imposed on non-compliant entities.
The register must be maintained throughout the duration of the company, and records kept for a period of five (5) years from the date of dissolution, liquidation or de-registration.
An individual (UAE resident) shall be designated as the authorized contact person of the entity in relation to the UBO register details.
Reasonable care and steps must be taken to ensure transparency, accuracy and timely update of the information by the applicable entities.

Please feel free to contact Freemont Oneworld Group to get a better understanding or any assistance in preparing and complying with the updated regulations and filing the same with your applicable Registrar(s).

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