The Ultimate Beneficial Ownership (UBO) Regulation in the UAE: Procedural Amendment

Cabinet Resolution No. (58)/ 2020 regulating Procedures related to Beneficial Owners (the ” Resolution “) came into force on the 27th of August 2020 superseding earlier cabinet resolution of 34 of 2020.

The Resolution imposes new procedural requirements for companies, registered and licensed in the UAE on disclosure and record-keeping to enhance transparency in the UAE’s business climate and develop effective and sustainable executive and regulatory mechanisms on beneficial owner data.

The Resolution requires the UAE licenced companies to prepare and file an Ultimate Beneficial Owners’ (UBOs’) register, a Partners’ or Shareholders’ register and a Nominee Directors’ register with the relevant UAE authority.

The requirement of maintaining and filing Partners’ or Shareholders’ register has already been there in the UAE under the Commercial Companies Law 2015 including respective free zone companies regulations and the Nominee Directors’ and UBOs’ register are newly introduced requirements.

The Resolution is applicable for all companies registered and licensed in the UAE excluding companies in financial free zones (Dubai International Financial Centre and Abu Dhabi Global Markets) and companies directly or indirectly wholly owned by Federal or Emirate.

UBOs’ register needs a careful analysis of a company’s corporate structure, management and control to identify and disclose the real beneficiaries who are natural persons and ultimately own or control a company through the direct or indirect ownership of a minimum 25% of company’s shares. The real beneficiaries also have the right to appoint or dismiss the majority of Directors and/or Managers.

In absence of natural persons owning a minimum of 25% of the company’s shares, then any natural person exercising control over the company by other means shall be identified as the UBO. In case, any natural person doesn’t satisfy this condition too then any natural person responsible for the senior management of the company shall be deemed as the UBO.

Register of Partners/ Shareholders must contain information about the number of ownership interests held by each partner or shareholder including voting rights attached to such ownership interests and the date of acquisition of ownership interests. It also requires details of any trustee with rights and powers in respect of the company as evidenced from the document establishing a trust.

Register for Nominee Director/ Manager must have details of Directors/ Managers and must be a natural person serving in a Director capacity and acting following guidelines, instructions, or will of another person, the Nominee Manager.

As per the Resolution, the companies must notify the relevant authority about any change or revision in the information provided within 15 days of such change or revision and the registers are required to be updated accordingly.

Companies failing to comply with the requirements of this Resolution, the UAE Ministry of Economy will impose sanctions on these companies. The administrative sanction details are yet to be published.

There should be the primary contact in the company as an authorized agent for submitting information to the authority as well as receiving notifications if any.

All information provided in the registers is to be kept confidential and unavailable to the public domain as per the privacy protection policy of the UAE.

Over the past years, some free zones in the UAE e.g. Dubai Multi Commodities Centre, Jebel Ali Free Zone, TECOM already implemented requirements of UBO information during registration and licensing of companies. The recent announcement of Resolution 58 will now bring uniformity amongst all free zones and mainland companies.