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Ultimate Beneficial Ownership (UBO)

Ultimate Beneficial Ownership (UBO)

Cabinet Decision NO. 58 Of 2020: REGULATING THE BENEFICIAL OWNER PROCEDURES

The United Arab of Emirates just recently replaced Cabinet Resolution No. 34 of 2020 to Cabinet Resolution No. (58) of 2020 regulating Beneficial Owner Procedures (the “Resolution”). The Resolution covers the most updated requirements for the entities in UAE to disclose its beneficial owners which are intended to enhance transparency of the UAE registered entities. It likewise intends to develop effective and sustainable executive and regulatory mechanisms and procedures in respect of beneficial owner data.

The Ultimate Beneficial Owner’s (UBO’s) objectives cover the maintenance of the economic position of UAE with international requirements. It also aims to regulate minimum obligations in disclosure of Beneficial Owners, Shareholders, Partners and Nominee Board Members, and lastly, to establish an effective regulatory mechanism and procedure for the beneficial owner data.

How to Identify Ultimate Beneficial Owner?

Ultimate Beneficial Owner Rule

As per Cabinet Resolution No. (58) of 2020, Beneficial Owner or Real Beneficiaries can be the following:

For UBO:

  • UBOs are individuals who ultimately own or control or have the right to vote with a minimum of 25% shareholding of the company, either directly or indirectly, or who have the right to either appoint or dismiss the majority of the Directors/Managers.
  • If no one meets the condition above, then any natural person who has the power to control the company using any other means may be termed as the UBO.
  • In cases where UBO cannot be identified through the two conditions above, then a natural person who holds Higher Management in the company may be deemed as the UBO.

For Nominee Director/Manager:

  • The details of the Director / Manager, acting in agreement with the instructions of another person.

For the Partner/Shareholder:

  • A UBO is any individual who controls 25% or more of the capital of the partnership, or who ultimately is entitled to control 25% or more of the voting rights of the partnership.

On the other hand, there are entities which are exempted with this resolution. They are as follows: (a) the companies in financial free zones like Abu Dhabi Gold Markets and Dubai International Financial Centre, and (b) the companies which are directly or indirectly owned by the Federal or Emirate Government.

Entities will need to assess who constitutes a UBO and consider whether anyone is a nominee Director / Manager. The Register of Shareholders / Partners is not a new concept as this is a requirement outlined in the UAE Commercial Companies Law, as well as in respective Free Zone Companies Regulations. Although the Resolution requires additional information to be detailed (for example, voting rights).

Ultimate Beneficial Owner Companies Act

As per Cabinet Resolution No. (58) of 2020, all Relevant Entities must perform the following:

  1. Maintain in their headquarters each the following registers:
    • Partners/Shareholders (state the information about the ownership interests and voting rights held by each individual);
    • Real Beneficiaries (provide the reason behind being Real Beneficiaries and the date they termed as one;
    • Directors and Nominee Directors;
  2. Submit the information mentioned above (information must be accurate) with the relevant authority by no later than 27 October 2020. (Note: All the information will be handled confidentially by the authority);
  3. Notify the relevant authority of any amendment regarding the initial information given, provided within fifteen (15) days of such change or amendment.
  4. Provide a contact details of an in individual (resident in the UAE) with whom the authority can contact regarding any information provided.

If entities failed to comply with the Resolution, the UAE Ministry of Economy possibly enforce sanctions on those entities. The list of administrative sanctions is yet to be issued.

Deadline for the UBO Declaration

Authority Name Notification required Notification deadline
Dubai Media City (DMC) Yes 27th of October 2020
International Freezone Authority (IFZA) Yes 27th of October 2020
Dubai Studio City (DSO) Yes 27th of October 2020
Ras Al Khaimah Economic Zone (RAKEZ) Yes 27th of October 2020
Fujairah Creative City (FCC) Yes 27th of October 2020
Sharjah Media City Free Zone (SHAMS) Yes 27th of October 2020
Ajman Free Zone Authority (AFZA) Yes Before 31st of October 2020
Dubai Multi Commodities Centre (DMCC) Yes Before 31st of October 2020
Dubai Outsource Zone (DOZ) Yes Waiting for the ministry's confirmation
Dubai Airport Free Zone (DAFZA) Yes Waiting for the ministry's confirmation
Dubai South (DWC) Yes UBO applied only to Corporate and Branch companies. For other entities, still waiting for the ministry's confirmation.
Dubai Internet City (DIC) Yes 30th of September
Jebel Ali Free Zone (JAFZA) Yes No timeframe (Until further notice)
Dubai Silicon Oasis (DSO) Yes 1st of November 2020
Dubai Department of Economic Development (Dubai DED) Yes No timeframe (Until further notice)
Sharjah Airport International Free Zone (SAIF) Yes Submission will be updated next week via an official email
Dubai Science Park Yes 31st of October 2020
Dubai Development Authority (DDA) Yes The deadline was supposed to be 30th of September. However, if an entity is not able to comply yet, an entity can still submit the UBO declaration.
Hamriya Free Zone Yes The deadline was supposed to be 1st of November. However, if an entity is not able to comply yet, an entity can still submit the UBO declaration.
Abu Dhabi Department of Economic Development Yes No timeframe (Until further notice)
Sharjah Department of Economic Development Yes No timeframe (Until further notice)
For Other Authorities:

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

Synopsis

  • All entities in the United Arab Emirates (unless excluded by the Resolution) must comply with the preparation of the UBO Declaration until 27 October 2020.
  • The filing of the UBO Declaration to the relevant authority is until 27 October 2020. Some other authorities extended the filing until further notice.
  • The entities shall notify the relevant authority of any amendment regarding the initial information given, provided within fifteen (15) days of such change or amendment.
  • For Dubai Department of Economic Development, note that the cabinet resolution No. 58 includes companies that have a corporate’s shareholder, LLC for one person (owner is a company), a service agent (UAE company 100%), representative offices or branches in general (Branch of a foreign company – GCC - Local - Free zone).

How can we help?

On your behalf, AMCA will be the one to prepare the registers of the UBO’s Partners/Shareholders and Nominee Directors/Managers (if applicable) as per the Resolution. You will not be worried regarding the filing of your declaration of UBO, because we will do it for you. In addition to that, we’ll take care of informing the relevant authority regarding the changes and amendment on the information provided. Rest assured that you are in good hands during the filing and submission of your UBO if you work with us.

24 Oct 2020

Mohammad Sharique Nadeem

Business Analyst

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