Ultimate Beneficial Owner in UAE: Submission, Details, and Penalties for Non-Compliance

June 13, 2021Dated:  | |

The UAE government on the 28th of August 2020 issued Cabinet Decision No. 58 of 2020, to regulate Ultimate Beneficial Owner Proceeding (UBO) in the UAE and thus increase corporate transparency in the UAE. This resolution replaces Cabinet Decision No. 34 of 2020 on the proceedings related to real beneficiaries. According to the resolution, every registered Audit Firm in UAE, unless specifically exempted (like the companies owned by or affiliated to the government and those in financial free zones) is required to maintain,

  • A register of the shareholders or partners,
  • A register of ultimate beneficial owners (UBO),
  • A register of the nominee directors (if required),

and all of these submitted to the relevant licensing authority either before the deadline specified by the authority or before the 30th of June 2021. They are also expected to keep relevant documents with them at all times, and any updates or changes to be informed to the concerned authorities within 15 days of the change.

The important information to be included in the UBO register in UAE are:

  • Name in full
  • Nationality
  • Date and Place of Birth
  • ID/ Passport number, issuing country, date of issue, and expiry date.
  • Residential address(es) to which notices are to be sent
  • The date on which the person was appointed as the ultimate beneficial owner
  • The date on which the person retired ceased being the ultimate beneficial owner.

According to the resolution, an Ultimate Beneficial Owner (UBO) in UAE is determined using the following criteria:

  • person (or party) who owns or is in control of at least 25% of the company’s shares.
  • Or holds at least 25% of the voting rights, directly or indirectly.
  • Or holds the right to appoint/dismiss the managers by any other means.
  • And in case none of these scenarios work, a person who holds and senior managerial position becomes the real beneficiary.
  • In case the conditions specified are shared by more than one person/ party, they are all identified as the joint owners.

 

The relevant entities chosen accordingly should:

  1. Maintain the mentioned registers.
  2. Maintain other important documents or forms that are to be submitted to the authorities.
  3. Make sure the data is clear and submitted on time to their relevant authority.
  4. Appoint a person for the authorities to contact when necessary.
  5. Notify the authority in case any changes or amendments are made (Withing 15 days of the change).
  6. Keep the data updated to avoid any penalties.

Once verified its registers, the company will receive a UBO certificate issued by the licensing authority which they could submit in times of law enforcement inquiry.

However, if the companies are found to be non-compliant with UBO resolution,

  • A written warning imposing fines up to AED 100,000 will be issued.
  • In case of continued failure in submitting or updating, in addition to the administrative penalties the license will be suspended for one year, with the authority of the board members restricted.
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