By way of Cabinet Decision No. 58 of 2020, the UAE has implemented a new UBO regime applicable to businesses established in the UAE, except for ADGM and DIFC businesses. The latter are subject to their own regulations. Government owned businesses are also excluded.

Under the new UBO regime, businesses in the UAE are subject to more strict compliance obligations. For some Free Zones, certain requirements were already in place, and therefore the new regime does not change much.

The new UBO regime stems from the Anti Money Laundering legislation in the UAE, more in particular Federal Decree-Law No. 20/2018 and its Implementing Regulation. It is suspected to target amongst others disclosures of nominee structures.

The new UBO regime requires businesses in the UAE to maintain beneficial ownership and shareholder registers at their registered office, and to submit information from these registers to their regulatory authority (e.g. DED or Free Zone Authority). Any changes in the information previously provided, need to be disclosed as well.

Keeping a UBO Register

The requirement to submit the UBO Register has been in place before and was sometimes required e.g. upon issuance of the trade license of a new entity in the UAE. However, with the latest Decision, UAE entities are required to maintain a UBO Register and update the Regulators accordingly for any changes.

Who is the UBO?

A beneficial owner can be determined as follows:

1. Any physical person who owns or ultimately controls through direct or indirect ownership shares at the rate of 25% or more, or whoever has the right to vote at the rate of 25% or more, including retaining ownership or control through other means such as the right of appointment or dismissal of most of the Managers.
2. If no physical person was determined as per (1), the physical person who exercises control over the legal person through other means such as the right of appointment or dismissal of most of the Managers
3. If no physical person can be determined as per (1) or (2), then the physical person who holds the position of the person in charge of Senior Management.

What goes in the UBO Register

The UBO Register needs to contain the following information on the UBO:

• Name, nationality, date and place of birth
• Place of residence or address 
• Number of travel document/ID card, country, date of issuance and expiry
• Basis on which the UBO is the UBO
• Date of acquiring capacity as UBO
• Date on which UBO ceased to be UBO 

Shareholder or Partner Register

Businesses are further required  to hold a Shareholder or Partners Register. Holding a Shareholder or Partners Register constitutes good practice anyways, and is part of good governance for any company. That Shareholder or Partner Register will now need to be submitted as well. Changes to the Register are to be notified within 15 days as well of being aware of a change in the Register.

The Shareholder Register needs to contain:

• Number of quotas or shares owned by each of them and the category thereof, as well as the voting rights associated thereto
• Date of acquisition as capacity as partner or shareholder
• ID’s of natural persons, or corporate information

Compliance before due date

The identification of the UBO can be quite challenging for some UAE companies which are part of a wider and more complex group, when the requirement is to identify the physical person who ultimately owns the company.

According to the new regime, the data needs to be submitted within 60 days of the date of Publication of the Decision. This needs to therefore happen on or before approximately 27 October 2020.

In conversations with the Authorities which need to receive the information, we understand however that the Authorities which need to receive the information, are not yet ready to do so.

Even though the penalty framework is not known yet, we can expect it to be strict and punitive.

Tax perspective

The recent introduction of different laws in the UAE such as the Economic Substance Regulations (ESR), Country-by-Country Reporting (CBCR) and Common Reporting Standards (CRS) also require UAE businesses to provide a certain level of information regarding the UBO. From a tax perspective, it should be ensured that the information provided to the relevant Regulatory Authorities is consistent and under no circumstances incorrect. Incorrect or misleading information may lead to significant penalties being imposed by the Authorities. 

The penalty for providing inaccurate/incomplete information under different laws are: 

• ESR: AED 50,000 
• CBCR: AED 50,000
• CRS: AED 20,000

The information will be further exchanged with other jurisdictions.

Our assistance

Should your company require assistance with the UBO compliance, Aurifer can assist you with the following:

• Determine the UBOs of your company
• Prepare the Registers in the Regulator’s form/Declaration
• Assist in the submission of the Registers/Declaration to the relevant Regulators