Ultimate Beneficial Owner (UBO) disclosure was mandatory when setting up a company. Now businesses also need to file their Ultimate Beneficial Owner register, and disclose shareholders and nominal management members to the licensing authorities.
On 27th August 2020, UAE has promulgated Cabinet Decision No. (58) of 2020 Regulating the Beneficial Owner Procedures which is in line with Federal Decree-Law No. (20) of 2018 on Anti-Money Laundering and Combating the Financing of Terrorism and Financing of Illegal Organizations and Cabinet Decision No. (10) of 2019 on the Executive Regulations of Federal Decree-Law No. (20) of 2018 on Anti-Money Laundering and Combating the Financing of Terrorism and Financing of Illegal Organizations.
Who can be termed as Beneficial Owner or Real Beneficiaries?
As per Cabinet Decision, Beneficial Owner or Real Beneficiaries will be determined as below:
- an individual, who owns or controls 25% or more of a “Business Partner”, either directly or indirectly. Whoever has the right to vote at the rate of 25% or more, including retaining ownership or control through other means such as the right of appointment or dismissal the most of the Managers.
- Joint ownership or control by 2 or more natural person in Legal Person will also qualify as Beneficial Owners for such ratio
- In cases where direct Beneficial Owner cannot be identified then, the natural person who controls the Legal Person by other means of control shall be deemed as the Beneficial Owners; or if still, Natural Person is unidentified then Natural Person who holds Higher Management position (taking major decisions for the Legal Person) shall be deemed as the Beneficial Owners.
Objective & Scope of Ultimate Beneficial Owner
- Maintain UAE’s economic position with International requirements
- To regulate minimum obligations in disclosure of Beneficial Owners, Shareholders, Partners & Nominee Board Members
- To have effective & enduring regulatory mechanism & procedures for the beneficial owner data
Cabinet Decision No 58 of 2020 is applicable to all Legal Persons (having separate Legal Identity) licensed & registered in the UAE i.e. Legal Person in the UAE Mainland & Non-Financial Free Zones
Provisions the Decision shall not apply to:
- Companies which are wholly owned by Federal or Local government, or other companies which are owned by such Companies (100% Subsidiaries of Companies held by Federal or Local government)
- Financial Free Zones (e.g. ADGM, DIFC)
Role & Responsibilities of Legal Person
- Legal Person should provide all the required details at the time of licensing & registration.
- It should clearly mention its trade name & address in the UAE in all correspondence and documents
- Issue notices to Beneficial Owners where there is doubt on the real beneficiary
- Maintain and provide the details on Beneficial Owner in the Register and shall update the same within 15days of becoming aware of any changes
- It shall keep and maintain Register of Partners or Shareholders and must update the same within 15days of becoming aware of any changes
- Furnish the Registrar with the data contained in the Register of Beneficial Owner and Register of Partners or Shareholders within 60days from the date of enactment of Decision (by 26th October 2020) or date of licensing or registration of Legal Person.
- Provide the data or documents as requested by the registrar and disclose the same with personnel or authorized agents
- Cases, where the Legal Person has made any amendment or change in data or information filed with Registrar, shall notify the Registrar within (15) fifteen days of the date of making the amendment or changes.
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