Introduction
The Cabinet Decision No. (58) of 2020 regulating the Beneficial Owner disclosure Procedures, hereinafter referred to as the “Decision” replaced the Cabinet Decision No. (34) of 2020 dealing with the Regulation of Beneficial Owner Procedures and came into effect on 28.08.2020. The Decision was enforced in furtherance of combatting money laundering and terrorism funding, both of which have been regulator’s highest priority in recent years. It also seeks to match the international practices to counter fraud.
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OBJECTIVES
As given under Art. (2) of the Decision, it aims at regulating the Register of Beneficial Owner and the Register of Partners or Shareholders, by implementing effective procedures for the beneficial owner data. The Decision seeks to enhance transparency of entities registered in the UAE with trade license. By having data of the ultimate beneficial owner of the company, i.e. the person who ultimately benefits from the profits of the company, the regulatory authority seeks to counter fraud and eliminate possibilities of money laundering and terrorism funding.
APPLICABILITY
The Decision applies to the Registrar and the licensed or registered Legal Persons in the State, including the Commercial Free Zones.
However, it shall not apply to the companies which are wholly owned by the Local or Federal Government, or any-other companies wholly-owned by such companies, and the Financial Free Zones (DIFC/ADGM).
Companies listed on a recognized stock exchange subject to disclosure requirements which ensure sufficient transparency on its beneficial owners or a company wholly-owned by such listed companies are not required maintain data in respect of the beneficial owner either.
IMPORTANT CONCEPTS
Beneficial owner: The following person/s are identified as the beneficial owner.
Condition 1: The Beneficial Owner of the Legal Person shall be whoever person that ultimately owns or controls, whether directly through a chain of ownership or control or by other means of control such as the right to appoint or dismiss the majority of its Directors, 25% or more of the shares or 25% or more of the voting rights in the Legal Person.
Condition 2: If no natural person is identified as an ultimate Beneficial Owner in accordance with Condition 1, or there is reasonable doubt that any natural person identified as an ultimate Beneficial Owner is the true Beneficial Owner in the Legal Person; then the natural person who controls the Legal Person by other means of control shall be deemed as the Beneficial Owner.
Condition 3: Where no natural person is identified in accordance with Condition 3, then the natural person who holds the position of a higher management official shall be deemed as the Beneficial Owner.
Nominee Board Member: The concept of a nominee board member was introduced through this Decision. A nominee board member refers to any natural person who acts in accordance with the directives, instructions or wills of another person.
REQUIREMENTS IMPOSED BY THE DECISION
The Decision mandates the companies to which it is applicable, to maintain the following Registers:
- Register of UBOs (Ultimate Beneficial Owners)
The UBO Register should contain the following information about the real beneficiaries:
- Full name;
- Nationality;
- Date and place of birth;
- Place of residence;
- Passport or ID No.;
- Basis on which he became a real beneficiary;
- Date on which he ceases to be a real beneficiary of the legal person.
- Register of Partners & Shareholders
The Partners and Shareholders’ register should contain the following information:
- Number or class of shares owned by each partner/shareholder;
- Date on which partner’s or shareholder’s capacity was acquired;
- For partners or shareholders who are natural persons, basic information like ID, Passport, Nationality, Address, Place of birth and other information must be recorded along with the true copy.
- Register of Nominee Directors
Basic information such as ID, Passport, Nationality, etc. pertaining to Board Nominee Members must also be recorded.
DEADLINES
The data in the Registers of UBOs, Partners & Shareholders and Nominee Directors is required to be submitted to the Registrar within 60 days of the promulgation date of the Decision, i.e. before 27.10.2020. However, the date for filing the information was extended by the Jebel Ali Free Zone Authority (“JAFZA”) to 31.03.2021 and subsequently, to 15.04.2021. However, the final date for filing the information has now been extended to 30.06.2021.
The company is required to notify the Registrar in case of changes in the Registers within 15 days of such change.
If the company is in the process of dissolution or liquidation, the liquidator shall submit a copy of the Beneficial Owner Register and Register of Partners or Shareholders, if any, or a true copy thereof within 30 days of his appointment, to the Registrar.
SANCTIONS
Failure to comply with the Decision shall lead to Administrative Sanctions, which will be in accordance with the Cabinet Decision No. (53) of 2021, which shall be effective from 01.07.2021.
Sanctions maybe appealed within 30 days of its imposition.
