Greater transparency within companies
The government of the United Arab Emirates published Cabinet Resolution 58 on August 28, 2020, replacing Cabinet Resolution 34. This resolution aims to regulate UBO procedures in order to increase the transparency of entities registered in the United Arab Emirates.
The resolution requires all companies holding commercial licenses in the United Arab Emirates (unless exemptions apply) to prepare and maintain a UBO register containing information about nominee members of the board of directors, as well as a register of partners or shareholders.
Any delay in declaring the UBO will result in very heavy penalties of up to AED 100,000!
The Ministry of Economy of the United Arab Emirates launched this UBO campaign for companies already registered and for those planning to establish themselves in the Emirates. Companies that take the risk of failing to comply with the new rules will be subject to sanctions starting in July.
This campaign targets more than 500,000 non-financial companies that are required to provide complete data on their UBOs.
“Money laundering and terrorist financing crimes are a major concern affecting most of the world's economies, especially today with the advent of modern digital technologies in the financial sector, trade and investment activities, and business,” said Safeya Al Safi, Director of the Anti-Money Laundering Committee within the Ministry of Economy.
Who are the UBOs?
In accordance with Cabinet Resolution 58 of 2020, UBOs may be the following:
- An individual who fully owns/controls the establishment through direct/indirect ownership interests of 25% or more.
- Alternatively: someone who holds 25% or more of the voting rights, or the right to appoint/remove the majority of the establishment's managers, or any other means by which they exercise ultimate control over the establishment.
- Where the UBO cannot be identified based on the two conditions above, the individual who holds the position of Director in the company may be considered the UBO.
On the other hand, certain entities are exempt from this resolution. Namely:
- (a) companies located in the following Free Zones: ADGM and DIFC, as well as
- (b) companies directly or indirectly owned or affiliated with the federal or emirate government.
These procedures are taken very seriously by the authorities for the sole purpose of combating money laundering, terrorist financing and the financing of illegal organizations, as well as the proliferation of weapons of mass destruction.
This campaign will therefore end on June 30, 2021. It should be noted that, starting July 1, 2021, the fines defined by Cabinet Resolution 58 will begin to be imposed. These range from a simple written warning to fines of up to AED 100,000, as well as administrative fines and the possible suspension of the commercial license for one year, etc.
How and where to register?
Before submitting the information, you must identify your company's UBO. After that, you will gather all the personal data and complete the UBO register. The resolution requires non-financial companies to provide the following:
- Beneficial owner register
- Information on nominee members of the board of directors
- Partners or shareholders register
The UBO register contains updated information about a company's UBO. The following UBO data must be entered in the register:
- Full name, place and date of birth, and nationality
- Residential address to which notices must be sent
- ID card or passport number, country of issue, issue date and expiry date
- The date and basis on which the individual became the company's UBO.
- The date on which the individual ceased to be the company's UBO.
You can obtain all the information and data you need to provide in
the guidelines for Cabinet Resolution 58/2020:
To help you comply with the authorities of the United Arab Emirates, our firm can assist you with:
- Identifying your company's UBO(s)
- Preparing the UBO, Partners – Shareholders, and Nominee Directors – Managers registers
- Submitting the register information.
For more details and assistance, please contact us at
support@merritt.group .
