Ultimate Beneficial Owner (UBO) Disclosure Requirement for UAE Companies

United Beneficial Owner

Ultimate Beneficial Owner (UBO) Disclosure Requirement for UAE Companies

The UAE government has been taking a few effective measures for the last couple of years against money laundering and terrorist financing activities. One such decision was the Cabinet Decision No. 58 of 2020 on the Regulation of the Procedures of the Real Beneficiary. This decision requires the companies registered in the free zones and the mainland to keep a register of the Ultimate Beneficial Owner (UBO) and submit the same information to the relevant authorities. The deadline for submitting such information according to this decision, which came into effect on August 28, 2020, is October 27, 2020.

This will become a part of the process of license application or incorporation of a company onshore or in the free zones.

The purpose behind this regulation and similar other decisions is to bring more transparency in the economy through increased disclosure and record-keeping requirements for the companies. Regulation on UBO in Dubai will require the companies to carefully ponder over their ownership structure to avoid any kind of non-compliance with anti-money laundering and combating the financing of terrorism laws.

To better understand the decision; here are the answers to a few questions that may arise in your mind regarding compliance with this decision: 

What is the ultimate beneficial owner (UBO)? 

Ultimate Beneficial Owner definition

The decision defines a UBO or a real beneficiary as,  

  1. Any natural person owning or controlling at least 25% of the issued share capital of the company, whether through a direct or indirect chain of ownership or control, or any natural person having the right to appoint or dismiss the majority of the directors of the company; 
  2. If no natural person meets the first criteria under point ‘a’ or the identity of the beneficial owner is in doubt, the beneficial owner shall be any natural person who manages or administers the company; or 
  3. If the company is not able to identify a person that meets the criteria under points ‘1’ and ‘2’ above, the beneficial owner shall be the natural or a legal person who is the senior manager of the company.  

The decision also defines the concept of nominee director as, 

A nominee director is defined as a director or manager who acts at the instruction or decision of another person.

To whom does the UBO regulations in UAE apply? 

UBO compliance requirements applicability

The Cabinet decision on Ultimate Beneficial Ownership is applicable to all the companies in the onshore and free zones of the UAE, except companies wholly owned by the local or federal government directly or indirectly and its subsidiaries and companies registered in the financial free zones, which includes Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM).

What are they required to do? 

UBO requirements

All the mentioned companies must keep, maintain, and furnish the following information to meet UBO disclosure and compliance requirements: 

Partners or Shareholders Register (PSR) 

Real Beneficiary Register (RBR) 

Register of Nominee Directors 

The Ultimate Beneficial Owner register must have all the information on the real beneficiary, including full name, place of residence, temporary address (if any), date and place of birth, nationality, identification number or passport number, date of appointment as a UBO, and the date until which the person remains a UBO, and the reason for which the person was named as an Ultimate Beneficial Owner. 

As per the UBO declarations in UAE, these registers should have information about the beneficiary owners and their beneficiary interests in the respective company. Besides maintaining the registers of beneficial owners and nominee directors, the companies must ensure to send a notification to the regulators regarding any changes or updates in the beneficial ownership or nominee directorship within 15 days of the amendment.  

They must appoint a UAE-resident who will stand as the designated point of contact for the regulators regarding any notification related to this disclosure. The details, including name, contact number, and identification proof of such an individual, must be submitted to the authorities. Henceforth, the companies will be required to submit this information within 60 days of the date on which their license was issued. 

Who are exempt from this UBO related requirement? 

UBO exemption provisions

Ultimate Beneficial Owner (UBO) Disclosure Requirement for UAE Companies

Companies that are listed on the regulated stock exchanges and the subsidiaries of such listed companies are not required to submit any separate registers with information about Ultimate Beneficial Owner to the Registrar; instead, the disclosures made by them to the relevant stock exchanges work as the relevant required submission.

What are the repercussions of failing to maintain the UBO register in UAE?

UBO compliance is in the interest of the company

The UAE Ministry of Economy makes it mandatory for companies to submit the Ultimate Beneficial Owner register to the Registrar within the deadline; if the companies still do not comply, the Ministry will impose administrative sanctions. However, the Ministry has not declared the sanctions yet.  

What are the other key requirements of this decision? 

Ultimate Beneficial Ownership key provisions

  • This information must be submitted to the relevant authorities responsible for registration, incorporation, and licensing processes that control the register of trade names of the entities registered in the country.  
  • If the companies are under liquidation or dissolution, the official liquidator, once appointed, must submit the true copy of the updated register to the Registrar within 30 days of his/her appointment. 
  • In case the companies are liquidated, they must maintain this information for at least five years from the date of its liquidation, dissolution, or de-registration; otherwise, it must be maintained for the entire lifetime of the company.  

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Consulting services on UBO regulations in UAE

N R Doshi & Partners

If you would like to have further details as to regulations on UBO in UAE or are confused about any part of it, contact the professionals at N R Doshi and Partners. We have in-depth knowledge and experience in staying on course with UBO registration in UAE, UBO deadlines, maintaining UBO Register, and complying with all the requirements of regulations as to Ultimate Beneficial Owner in UAE. Our professional, dedicated, and competent team of AML consultants always ensures that our clients achieve full compliance with the government regulations.  

Our experienced professionals can guide you in maintaining the required registers and help you with any information on the same.  

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