Ultimate Beneficial Owner Regulations

New regulation in respect of disclosing the Ultimate Beneficial Owners (UBO) of businesses have been implemented in the UAE via Cabinet Decision No 58 (Regulation).

The UBO regulation emanate from Anti Money Laundry regulations and it aims to enhance transparency and to develop effective regulatory mechanisms and procedures in this regard.

What is required?

The new Regulation requires businesses in the UAE to prepare, maintain, and submit the following to their licensing authorities (Free Zones and mainland):

• Ultimate Beneficial Owners register
• Partners or Shareholder register

Submission deadline:

For mainland licenses, reference to circulars issued by the Economic Departments of many Emirates, the deadline is 15 June 2021, however, some businesses received SMS to register within 3 days. We urge you to register as soon as possible to avoid any penalty.

Free zones licenses were registered on October 2020 through their online portals.

The date of submission for new entities will be the date of establishment.

Submission mechanism:

Mainland:

Abu Dhabi: Department of Economic Development of Abu Dhabi, online form

Dubai: Dubai Economy: service centers or online.

Sharjah: Department of Economic Development of Sharjah, online form

Other emirates: Department of Economic service centers.

Free Zones:

All Free Zones have the UOB requirements in place with a process to file the information through their online portals.

Scope

The new regulations apply to all entities in the UAE except:

• Financial Free Zones entities (ADGM & DIFC)
• Wholly owned government entities

Who is the Ultimate Beneficial Owner (UBO)?

The UBO is the natural person who has the ultimate ownership or control over an entity directly or indirectly.

Reference to the Regulation, the UBO can be determined as follows:

1. A natural person who ultimately controls or owns 25% or more shares of an entity directly or indirectly or has a voting right of 25% or more. Control can be through other means like the right to appoint or dismiss the majority of managers.
2. If no natural person can be determined as per the condition (1) above, then the natural person who exercises control over the legal entity through other means will be considered as the UBO.
3. If no natural person can be identified as per the conditions (1&2) above, the top manager in the entity will be considered as the UBO.

For most companies in the UAE the UBOs will be the shareholders as shown in the articles of association. However, it could be challenging to determine the UBOs of companies that are partially or wholly owned by other companies. The more complex a group structure is, the more difficult to identify the UBOs and consistently maintain their register.

The UBO register

Entities must maintain and file a UBOs register which contains the following information, and must be continuously updated for any changes within 15 days of that change:

• Name, nationality, date and place of birth
• Address and place of residence where notifications must be sent
• Travel document and ID’s number, country, date of issuance and expiry
• The basis on which the person becomes a UBO, and the date of acquiring such capacity
• The date on which the person ceased to be a UBO.

The Shareholders register

Entities must maintain and file shareholders or partners register which contains the following information, and must be continuously updated for any changes within 15 days of that change:

• Number and type of shares owned, and the associated voting rights
• The date on which the person becomes a shareholder or partner
• For natural persons: name, nationality, address, place of birth, work address, ID and travel document copies.

The Nominee Directors register

A Nominee Director is any natural person who act according to other person’s instructions or will.

Nominal Directors/managers must present the same information as the shareholders above to the entity within 15 days of their appointment.

Scope

The new regulations apply to all entities in the UAE except:

• Financial Free Zones entities (ADGM & DIFC)
• Wholly owned government entities

Conclusion

Businesses in the UAE have to add a compliance procedure and process that effectively help to maintain an up-to date registers of UBO, shareholders, and Nominee directors and to file those registers to the relevant licensing authority at the right time.

How can Audiix help?

• Review your corporate structure and perform accurate UBO identification, as per the Regulation, or act following a change of the entity’s UBOs or shareholders.
• Maintain all required registers in a cloud based secretarial database dedicated to your business, accessible anytime from your computer or mobile.
• Assist in filing of all mandatory submissions to the relevant authority

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