The United Arab Emirates (UAE) recently issued Cabinet Resolution No. 58 of 2020 on the Regulation of the Procedures of the Real Beneficiary (the Resolution), which came into effect on 28 August 2020 and replaced Cabinet Resolution No. 34 of 2020 issued earlier this year.
The Resolution aims to introduce the requirement for a beneficial ownership register in the UAE mainland and unify the minimum disclosure requirements for corporate entities incorporated in the UAE mainland and in the non-financial free zones.
The Resolution addresses the disclosure requirements at the corporate registration stage, as well as the requirement to subsequently maintain a shareholder register, a register of beneficial owners and a register of nominee directors. Companies are now required to file the beneficial ownership information with the relevant Registrar by 27 October 2020.
- All companies in the UAE, both mainland and free zone companies (with the exception of companies incorporated in the financial free zones (Abu Dhabi Global Market (ADGM) and Dubai International Financial Centre (DIFC) and companies owned by the Federal Government and their subsidiaries), must now keep at their office premises:
a. a shareholder register;
b. a register of beneficial owners; and
c. a register of nominee directors.
- Companies must file such information relating to the shareholders and beneficial owners with the relevant registrar and licensing authorities responsible for supervising the register of trade names for the various types of establishments registered in the UAE (the Registrar) by 27 October 2020.
- Companies must notify the Registrar of any change or amendment to the information provided within 15 days of such change or amendment.
- Companies are required to designate an individual who the Registrar may contact in relation to any disclosure.
- Each company must take reasonable steps to ensure transparency, to obtain accurate information regarding the beneficial ownership, and to update the information on the registers on an ongoing basis.
- Companies which are listed in well regulated stock exchanges or companies which are owned by these listed companies may rely on the disclosures made to the relevant stock exchange rather than making independent inquiries as to the beneficial ownership.
The UAE Federal Law No. 20 of 2018 on Anti-Money Laundering (the UAE Anti-Money Laundering Law), which was issued on 30 October 30 2018, placed an obligation on corporate entities to disclose any individual ownership (whether beneficial or actual) in an entity which owns twenty five percent or more of the company, to the relevant regulator. Following the issuance of the UAE Anti-Money Laundering Law, several free zones in the UAE introduced requirements for the disclosure of the ultimate beneficial ownership.
- Shareholder Register
The concept of a shareholder register is set out in the UAE Commercial Companies Law. The Resolution, however, sets out the specific information that must be maintained in relation to each shareholder, including details of the senior managers of each shareholder.
- Register of Beneficial Owners
Article 5 of the Resolution provides that within sixty days of the issuance of the Resolution, each company must introduce a register of beneficial owners. For the purposes of the Resolution, the beneficial owner of a company shall be:
a. any natural person who ultimately owns or controls or has the right to vote over at least 25% of the company’s share capital, whether through a direct or indirect chain of ownership or control, or any natural person who has the right to appoint or dismiss the majority of the directors of the company;
b. if no natural person meets the criteria under point (a) above or if there are doubts as to the identity of the beneficial owner, the beneficial owner shall be any natural person who manages or administers the company; or
c. if the company is unable to identify any natural person that meets the criteria under points (a) and (b) above, the beneficial owner shall be the natural or a legal person who is the senior manager of the company.
- Register of Nominee Directors
This is a new concept introduced under the Resolution and requires a company to maintain a register of any director or manager who acts in accordance with the guidelines, instructions or will of another person.
Please feel free to contact one of the lawyers above or your usual Baker McKenzie contact, for further information or any assistance in preparing the relevant registers and filing the same with the Registrar.