A new rule recently entered into force in the United Arab Emirates (UAE) that will require certain companies to disclose their ultimate beneficiaries and ensure such information is kept up to date with the relevant UAE agencies. According to Cabinet Decision No. 58 / 2020, any entities that are incorporated in the UAE mainland or non-financial free zones must file a “Register of Real Beneficiaries” and “Register of Partners or Shareholders” with the relevant UAE authorities that supervise the existing register of commercial trade names. While some exceptions to these new required disclosures do apply, the new rule will impact almost all companies licensed to do business in the UAE.
Required Filing Information and Recordkeeping
According to the Cabinet Decision, entities will be required to disclose all “Real Beneficiaries,” defined as anyone who owns or ultimately controls, through direct or indirect ownership, at least 25% of an entity’s share capital, anyone who holds 25% or more of the voting rights; or anyone who has ownership powers through any other means. If no Real Beneficiary fits these criteria, or if there is any doubt over who has final controlling say, the person who exercises control over the entity through other means should be named as the Real Beneficiary. If no such person is identified, the Real Beneficiary is the person who holds the position of the head of Senior Management. The Cabinet Decision also requires that entities disclose their Nominal Managers, defined as “any physical person acting on the instructions of another person.”
In addition to completing the required filings with the UAE government, entities are also expected to keep detailed, accurate, and up-to-date records of their own. Companies should also plan to appoint a designated point of contact who will complete the necessary filings and address any inquiries from the UAE government.
Deadlines and Penalties
Companies that are already registered to do business have until October 27, 2020, to complete their initial filing, while all other companies will make their initial filings at the time of incorporation/registration. Notably, the Cabinet Decision also creates a requirement to provide notice of any changes to the information on the registries. Companies have only 15 days to update the relevant authorities when there is a change in the list of Real Beneficiaries.
Penalties for violating the requirements outlined in the Cabinet Decision could be significant. Both the Minister of Economy and the Licensing Authority specified under the Cabinet Decision can impose one or more sanctions for violations. Given the impending compliance deadline, entities should ensure they understand the new requirements and are well prepared to complete the necessary filings.
Questions?
The above details are meant to serve only as information on the new Cabinet Decision. This post does not constitute legal advice and is not comprehensive of all situations. We encourage viewers to read the full bill and/or reach out to your attorney with any questions or concerns. Follow our blog for updates as our team continues to analyze new legislation and regulations that impact companies operating in the Middle East and elsewhere around the world.
