UBO

What is UBO?

Cabinet Resolution No. (58) of 2020 regulating Beneficial Owner Procedures (the “Resolution”) took effect on August 28, 2020, and replaced Cabinet Resolution No. 34 of 2020 issued earlier. The Resolution covers the most updated requirements for the entities in UAE to disclose their Ultimate Beneficial Owners, which intends to enhance the transparency of the UAE registered entities. It also plans to develop effective and sustainable executive and regulatory mechanisms and procedures for beneficial owner data and improve implementation to ensure International Compliance and global confidence.

To Whom does this Impact?

This Resolution refers to all new and existing entities licensed or enlisted in onshore UAE and the commercial-free zones. It doesn’t make a difference to entities entirely claimed by the Federal or local government or some other companies entirely possessed by them or those corporate entities licensed or enlisted in the Abu Dhabi Global Market or the Dubai International Financial Center.

Deadline for the Ultimate Beneficial Owner UAE

According to the Ministry of Economy (MoE), about 513000 targeted establishments regulated by 38 licensing authorities all over the UAE are required to provide data on ultimate beneficial owners. All licensed by local licensing authorities as well as non-financial free zones are included. All entities in the UAE must comply with the preparation of the UBO Declaration until earlier than the deadline specified by their licensing authority or the 30th of June 2021.

For Other Authorities:

As per the advice from the other authorities, they are still waiting for the ministry’s approval regarding the extension request.

Deadline for the Ultimate Beneficial Owner UAE

According to the Ministry of Economy (MoE), about 513000 targeted establishments, regulated by 38 licensing authorities all over the UAE are required to provide data on ultimate beneficial owners. All licensed by local licensing authorities as well as non-financial free zones are included. All entities in the UAE must comply with the preparation of the UBO Declaration until the earlier of, the deadline specified by their licensing authority or 30th of June 2021.

For Other Authorities:

As per the advice from the other authorities, they are still waiting for the ministry approval regarding the extension request.

Violations and Administrative Fines for Ultimate Beneficial Ownership

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All companies registered and licensed in the UAE, including commercial-free zones, must submit authentic details (Data) of their (Real) beneficiaries to avoid penalties; administrative fines ranging from AED 50,000 to AED 1,000,000.

Cabinet Decision No. (16) of 2021 Regarding the Unified List of the Violations and Administrative Fines for the Said Violations of Measures to Combat Money Laundering and Terrorism Financing Subject to the Supervision of the Ministry of Justice and the Ministry of Economy.

How to Identify Ultimate Beneficial Owner?

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Ultimate Beneficial Owner Rule

According to Cabinet Resolution No. (58) of 2020, the Ultimate Beneficial Owner can be defined as the following:

• Natural Person who controls/owns the establishment definitively, through direct/indirect ownership of 25 % or more shares.
• Or: someone who holds the right to vote by 25% or more or the right to appoint/dismiss the majority of the establishment’s managers or any other means by which he exercises ultimate control over the establishment.
• Suppose the UBO cannot be identified using the two criteria listed above. In that case, a natural person who holds the position of Senior Management Official in the company may be deemed the UBO.

The Ultimate Beneficial Owner Procedures are the critical element in the UAE’s approach to combating money laundering and financing of terrorism and illegal organizations, and financing the spread of weapons of mass destruction under the Financial Action Task Force’s requirements and the National AML strategy’s determinants. These will help fulfill the objectives of Federal Decree-Law No. 20 of 2018 on Anti Money Laundering and Financing of Illegal Organizations and Countering Financing of Terrorism, and as per the Cabinet Resolution No. 58 of 2020 controlling the ultimate beneficial owner procedures.

Real Beneficiaries and the Real Beneficiary Register

As indicated by the Resolution, Real Beneficiaries are people who own or eventually control a corporate entity through the direct or indirect proprietorship of 25% or a greater amount of an entity’s shares or voting rights. The Resolution also states that such control can likewise emerge through different methods, such as reserving the privilege of designating or dismissing a majority of a company’s supervisors.

The Resolution sets out extra factors to consider while deciding a Real Beneficiary. However, suppose no individual can be distinguished at last. In that case, the Real Beneficiary will be the individual who directs senior administration (for example, the person(s) having the dynamic authority of an entity) and has the option to designate or dismiss the vast majority of the Managers.

This is required to be considered keenly, mainly when it isn’t clear to build up extreme proprietorship, for example, where a fund is a noteworthy shareholder in a company.

The real beneficiary register must incorporate the accompanying data for every real beneficiary of an element:

• Name, date, identity, and spot of birth;
• Location of home or address to which warnings can be sent;
• Emirates ID number or visa number and its date of issuance and termination;
• Reason for, and the date at which, the individual turned into a real beneficiary; and
• If applicable, the date at which the individual stops to be a real beneficiary.

Every single corporate entity (except those that are possessed by a listed company in a directed market subject to adequate ultimate beneficiary disclosure prerequisites or a subsidiary claimed by the majority of such a listed company) are needed to take sensible measures to get accurate, exact, and current data of their real beneficiaries. Also, they must refresh the real beneficiary register inside 15 days of getting mindful of any changes.

Register of Shareholders/Partners

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Even though there have commonly existed a prerequisite for companies to keep up a register of shareholders/partners, this Resolution sets out the data needed to be kept up by all corporate entities authorized or enrolled in onshore UAE and the commercial-free zones. Moreover, it necessitates that entities update their registers within 15 days of getting mindful of any changes.

The accompanying data is needed to be kept in the register of shareholders/partners:

• The number and class of shares held and the democratic rights related to such shares;
• The date on which the shareholder/partner turned into the proprietor of such shares;
• For each shareholder/partner who is an individual:
• Address;
• The nationality;
• Name and address of employer;
• Place of birth;
• An authentic duplicate of a valid Emirates passport or ID; and
• For each shareholder/partner that is a legal entity:
• Name, authoritative document, and a copy of its Memorandum of Association;
• Location of the principal office or base camp of the entity, and in case it is a foreign entity, name and address of its lawful agent in the UAE, and the supporting documentation confirming such data;
• “Resolution” or some other comparable records endorsed by the applicable authorities worried about the execution of the UAE’s anti-money laundering laws and guidelines; and
• Details of person(s) who hold senior administration positions.

Nominal Management Members and Trustees

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Notwithstanding the details of shareholders/partners, corporate entities should likewise keep up a similar data required for real beneficiaries for any trustees or nominal management members as a significant aspect of its register of shareholders/partners.

Going ahead, all nominal management members must tell and present the necessary data to the corporate element inside 15 days of being selected as a nominal member. Furthermore, corporate entities are needed to uncover details concerning the shares or interests and identity of the holders of any shares issued in the names of people or the board members inside 15 days of such issuance to the significant power.

Finally, all current nominal management members must tell the corporate body and present the pertinent data for an entity’s register of shareholders/partners inside 30 days of the Resolution’s distribution date.

How to submit Real Beneficial Owner data

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In relation to the Ultimate Beneficial Ownership, we will Perform a Preliminary Assessment of your business in fulfilling and complying with the process, procedures, and submission UBO Declaration. We are here to help you and your business comply with Ultimate Beneficial Ownership requirements efficiently and professionally.

Conclusion

Since the cutoff time for disclosure is quickly drawing nearer, corporate elements should find a way to accumulate the fundamental data to be agreeable with this Resolution. Likewise, the existing nominal management members should tell the concerned corporate elements and furnish them with essential data.

Our Hegal professionals have in-depth knowledge regarding all the information you require. If you have any further queries, do contact us. We would be happy to help.