UAE Ultimate Beneficial Ownership Regulations | UBO Resolution 2020

October 20, 2020by Mohammed Rahali

IN BRIEF

A new UAE Cabinet Resolution No. (58) of 2020, (the “UBO Resolution”, real beneficiaries resolution) on the Regulation of the Procedures of the Real Beneficiary for corporate entities, was issued on August 24, 2020 to replace Cabinet Resolution no 34 of 2020 in order to complement the Federal Law no 20 of 2018 on anti-money laundering (which requires disclosure of any natural person ownership of at least 25% in a corporate entity) comply with international requirements by uniformising the minimum disclosure requirements for all UAE corporate entities (mainland & free zone, except for exempted companies) to their regulators (Departments of Economic Development or similar Bodies):

  • arranging the minimum obligations of the UAE registrar and legal persons such as licensing and registration procedures;
  • establishing a uniform registration & reporting of the beneficial interests through a register (“Real Beneficiary Register”) of the beneficial owners (“real beneficiaries”);
  • establishing a uniform registration & reporting of the legal interests and nominee capacity through a partners or shareholders’ register (“Shareholders Register”);
  • establishing a uniform registration & reporting of the nominee capacity of shadow / nominee directors through a nominee directors’ register (“Nominee Directors’ Register”);
  • implementing regulatory procedures for the real beneficiary data.
  1. DEFINITIONS
    • Real Beneficiary (“UBO”) as per article 5 of the UBO Resolution (“Real Beneficiary Identification ” ): ‘’A Legal Person who has the ultimate ownership or exercises ultimate control over a Legal Person, directly or through a chain of ownership or control, or other indirect means, as well as the Natural Person who conducts transactions on behalf thereof, or who exercises ultimate effective control over
      • a Legal Person, that is determined according to the following provision:  the Legal Person’s Real Beneficiary shall be whoever owns or finally controls the Legal Person, through direct or indirect shares or equity of the Legal Person’s Capital at 25% or more, or has the right to vote therein at 25% or more, including retaining that ownership through a chain of ownership or control, or through control through any other means, such as the right to appoint or dismiss the majority of its directors (i);
      • The Real Beneficiary shall be tracked through any number of Legal Persons or arrangements of any kind.
      • If more than one person participates in owning or controlling a share of the Legal Person’s Capital, all of them shall be treated as owners and controllers of such share.
      • If all possible means have been used and no Natural Person with final controlling ownership has not been identified as stipulated in (i) hereof, or there is suspicion that the natural person who has final controlling ownership is the Real Beneficiary, then the Real Beneficiary shall be deemed the Natural Person who exercises control over the legal person, through other means (ii).
      • If there is no Real Beneficiary for the Legal Person in accordance with Clause (ii) hereof, the Real Beneficiary shall be deemed the natural person who occupy the senior management official (The decision-making authority of a Legal Person).’’
    • Nominee Director, Trustee, Nominee Shareholder (“Board Nominal Member” ):
    • ‘’ Nominal Board Member: A natural member acts in accordance with the guidelines, instructions or will of another person’’.
    • Senior Management: The decision making authority of a legal person”.

  

  1. SCOPE OF THE RESOLUTION
  • The UBO resolution applies to all UAE corporate entities including the commercial Free Zones with the exception of the below exempted companies (“subjected companies”).
  • The UAE companies wholly owned by the federal or local government, their wholly owned subsidiaries, and all Financial Free Zones companies- ADGM &DIFC- are exempted (“exempted companies”).

 

  1. REQUIREMENTS

            All UAE subjected companies, with the exception of listed companies (article 6 of the UBO Resolution) in an organized market that is subject to ad hoc disclosure requirements and their majority owned subsidiaries (‘’excluded companies’’) which then do not need to make different independent notifications, are required to maintain updated information on an ongoing basis by conducting the following actions:

  • Creating, maintaining at their premises on ongoing basis & filing before 27th October 2020 with the relevant registrar (such as licensing authority), their Real Beneficiary Register containing details of their beneficial owners;
  • Creating , maintaining at their premises on ongoing basis & filing before 27th October 2020 with the relevant registrar (such as licensing authority), their Shareholders Register containing details of their partners or shareholders and nominee shareholders / Trustee (with the represented real beneficiaries, article 10 clauses 2 & 3 of the UBO resolution);
  • Creating, maintaining at their premises on ongoing basis & filing before 27th October 2020 with the relevant registrar (such as licensing authority), their Nominee Directors’ Register containing details of their Board nominal members/nominee directors (i.e. Trustees or directors / managers, acting in accordance with instructions of another person);
  • Appointing a UAE resident natural person authorised to disclose to the registrar all information as required under the resolution;
  • Notifying any changes to the registers to the registrar within 15 days of the company’s management becoming aware of the change (article 8 of the UBO resolution);
  • Refusing to register or execute any document related to a change of ownership, unless the transferee submits a statement that includes whether the transfer will result in a change in the Real Beneficiary of the legal person, the nature of this change, and the provision of the data of the new Real Beneficiary and listing such data in the Register (Article 8 of UBO resolution).

These registers must be created and filed with the registrar within 60 days of the publication of the resolution (article 8 of UBO Resolution), before 27th October 2020 ,or at the incorporation date of the entity under risk of administrative sanctions for non compliance.

It is important to note that the “Ministry and the Registrar shall not disclose,” except as provided for in the resolution (e.g. as per provisions of international laws and agreements such a related to countering money laundering crimes & combatting the financing of terrorism, articles 15 & 16 of the UBO resolution), “the information of the Real Beneficiary Register and Partners & Shareholders Register or making them available to any person, unless the written approval of the Real Beneficiary or the Board Nominal Member (nominees/Trustees) is obtained (article 15 of the UBO resolution)”.

 

HOW CAN WINCORE HELP?

As a registered corporate service provider Wincore shall ensure that your company meets the new legal requirements through:

  1. Assessing whether your entity is subject to the resolution
  2. Assisting with the identification of the real beneficiary
  3. Assisting with collating all information on the respective natural and legal persons
  4. Drafting, maintaining and filing the required 3 registers with the registrar
  5. Drafting the Board resolution confirming the company’s legal compliance

For assistance on this matter or on any other corporate matter, feel free to contact us.

 

mm

Mohammed Rahali

Managing Partner | E: m.rahali@wincoreadvisory.com | M: +971 (0) 55 138 9591

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