Real beneficiaries - updated data collection and disclosure requirements in the UAE

Introduction

On 24 August 2020, the UAE issued Cabinet Resolution No. 58 of 2020 (included in the UAE Federal Gazette Index Issue No. 685 dated 27 August 2020) on the Regulation of the Procedures Related to Real Beneficiaries ("Decision"), replacing Cabinet Decision No. 34 of 2020. This decision requires companies licensed or registered in the UAE (excluding in the financial free zones) to create and maintain a register of their ultimate beneficial ownership ("UBO") and to submit UBO data to the relevant registrar or licensing authority ("Registrar").

As a result of the Decision companies are now required to submit UBO information to the Registrar by 23 October 2020 (within 60 days from the date of the Decision) or within 60 days from the date of a company’s license issuance, whichever comes first ("Deadline").

Aim and Scope of the Decision

The aim of the Decision is to regulate the requirement for corporate entities in mainland UAE and the commercial free zones to maintain registers listing the:

• physical person to whom the ultimate ownership of a company is devolved or who exercises final control over the relevant company, either directly or through a series of ownership or control or other indirect means, as well as the physical person on whose behalf the transactions are carried out or who exercises final control over a legal person; and
• partners or shareholders.

The provisions of the Decision apply to companies licensed or registered in mainland UAE and commercial free zones. The Decision does not apply to companies which are wholly owned by the federal or local government or its subsidiaries or which are registered in the financial free zones in the UAE (i.e. Abu Dhabi Global Market and Dubai International Financial Centre) ("Excluded Companies").

The Decision

1. With the exception of Excluded Companies, all companies in the UAE are now required to maintain the following at their registered office:

(a) Register of UBOs

• UBOs are natural persons who ultimately own or control or have the right to vote over at least a 25% shareholding of the company, whether through a direct or indirect ownership or who have the right to appoint or dismiss the majority of the directors/managers.
• If no natural person satisfies the condition above, then any natural person who exercises control over the company through other means shall be deemed as the UBO.
• If no natural person satisfies both the conditions above, then a natural person who is responsible for the senior management of the company will be deemed as the UBO.
• The following data of the UBO should be included: name, nationality, place of birth, residential address, travel ID card number and date of issuance and expiry, reason why the individual is classified as a UBO and the date on which the person became a UBO or ceased to be a UBO (if applicable).

(b) Register of Partners or Shareholders:

• The number of ownership interests held by each partner or shareholder and the voting rights attached to such ownership interests and the date of acquisition of ownership interests. For physical persons – the register should include their full names, nationality, address, place of birth, employer name and address and a ID or travel document copy and for legal persons – the register should include their constitutional documents, address and details of their senior management.

(c) Register of Nominee Directors/Managers:

• Details of directors/managers acting in accordance with the instructions of another person. The register should include their full names, nationality, address, place of birth, employer name and address and a ID or travel document copy.

2. All companies to which the Decision applies must, by no later than the Deadline, file with the Registrar, the information listed in paragraph 1 above. These companies must also file with the Registrar the details of an individual in the UAE who is authorized to disclose the information to the Registrar including such individual's address, contact information and ID card or travel document.

3. Any changes relating to the UBOs and shareholders of a company must be notified to the Registrar within 15 days of that change. The company's internal registers should also be updated within 15 days of the company's management becoming aware of such change.

4. All companies are required to ensure that the registers are updated to include accurate information of any changes to the UBOs and shareholders or partners and this should be maintained on a continuing basis.

5. In the case of companies which are under dissolution or liquidation, the appointed liquidator has an obligation to provider a true copy of the updated UBO register to the Registrar within 30 days of the liquidator's appointment.

6. If companies are found to be non-compliant with the Decision, the UAE Ministry of Economy may impose sanctions on those companies. The list of administrative sanctions is yet to be issued.

7. It is not clear at this stage whether the scope of the Decision will impact ownership structuring arrangements in place with UAE local partners who own 51% of a company due to foreign ownership restrictions. The scope of the Decision requires that these local partners and their personal details should be recorded on the shareholder register but does not specify that the structuring arrangements themselves need to be disclosed. However, as the rules have been drafted broadly to require disclosure of 'control' relationships full details of a company's ultimate controllers should be disclosed in the UBO register and to the Registrar regardless of the actual shareholding structure.

The intention of this news alert is only to provide a general guideline as to the subject matter. If you have any questions or require assistance in the preparation of the Register or filing with the Registrar, please contact the authors of this news alert at DLA Piper Dubai.