New UAE Cabinet Decision on Ultimate Beneficial Owner Procedures (UBO) 2020
Dubai introduces many welcomed resolutions to take care of UAE’s position as a world-leading trade hub, it enhances the economic stimulus of the state towards transparent business functioning. UBO (Ultimate Beneficial Owner) Cabinet Resolution No. (58) of 2020 is the latest resolution introduced by UAE in regulating Beneficial Owner Procedures with effect from 28 August 2020. In the past few years, financial frauds have increased dramatically, Fraudulent parties mask their activity and investigators regularly trace suspicious transactions. In brief Cabinet Resolution No. 58 of 2020 regulating Beneficial Owner Procedures came into effect and replaced Cabinet Resolution No. 34 of 2020 issued earlier this year.
To avoid falling under the regulatory purview of suspicious activity companies must supply full and up-to-date information for verification of legitimacy and accuracy. Therefore, the law Introduces the new requirements for entities to disclose their beneficial owners. The objective of this resolution is:
- To enhance the transparency of entities registered within the UAE
- To develop effective procedures to keep up beneficial owner data
- To introduce the sustainable and executive regulatory mechanisms
The resolution requires entities licenced in the UAE to file an:
- Ultimate Beneficial Owner (“UBO”) Register
- Nominee Director Register
- Partners or Shareholders Register
Within sixty (60) days from the date the resolution came or by the date, the entity is established to the concerned authority.
Applicability of the resolution
The resolution is applicable to all the entities licenced in UAE
- Main Land Companies
- Free Zone Companies
Non-Applicability of the resolution
The resolution is not applicable to the entities:
- Entities in Financial Free Zones E.g. - Dubai International Financial Centre (DIFC)
- Entities which are owned by Federal or Emirate Government
Who can Register as UBOs?
1. UBO Register
A natural person who ultimately owns or controls or has the right to vote with a minimum of 25% shareholding of the company. Direct or indirect ownership has the right to appoint or dismiss Directors/Managers. If the condition above is not satisfied, then any natural person who exercises control over the company through other means and a person who is responsible for the senior management of the company can also be deemed as the UBO.
The Ultimate Beneficial Owner Register has:
- Full name, place of residence, nationality
- Identification number or passport number
- Date of appointment as a UBO
- The date until which the person remains a UBO, and the reason for which the person was named as an Ultimate Beneficial Owner
2. Nominee Director Register
The Details of Directors/Managers are added to it, as per the instructions and information provided by the company.
3. Partner/Shareholder Register
The ownership interests of each partner or shareholder and the date of acquisition of ownership interests are to be provided. The percentage of interest shared and their voting rights too. Although the resolution requires additional information, for example, voting rights.
Points to Ponder
- Entities must notify the relevant authority of any change to the information provided within fifteen (15) days
- All entities in the UAE applicable to the resolution must prepare registers of UBOs, Shareholders (Partners) and Nominee Directors
How can CDA help you?
CDA can help you:
- Prepare registers by monitoring and verifying the documents mentioning the ownership interests, voting rights etc of the UBOs, Partners/Shareholders and Nominee Directors/Managers
- Arrange to file of the register with the concerned authorities
- Database management on an ongoing basis
- Inform the relevant authority on amendments to the information provided
- On-call availability of experts for queries and concerns
Hope you have got a clear idea about the new UAE Cabinet Resolution regulating the beneficial owner procedures. Still, you'd have thought, contact CDA to attend a one-hour free consultation to clarify your queries.