Background

The United Arab Emirates (UAE) recently issued Cabinet Decision No. 58/2020 on the Regulation of Procedures Related to Real Beneficiaries (“the Regulation”), which came into effect on 28 August 2020 and repealed Cabinet Decision No. 34 of 2020 issued earlier this year.

The objective of the Regulation is intended at combating anti-money laundering crimes, the financing of terrorism and financing of unlawful organisation, and likelihood of battling tax avoidance and providing greater transparency to the UAE’s business environment in line with the international guidelines and requirements.

Scope

The provisions of the Regulation shall apply to legal person licensed or registered in the State including commercial free zones in the UAE (Covered Companies/Covered Licensee).

Exclusion

The companies wholly owned by the Federal or local government or any other companies wholly owned by these companies, as well as the financial free zones (Dubai International Free Zone and Abu Dhabi Global Market), shall be excluded from the provisions of this Regulation.

Key Takeaways

  • A Real Beneficial Owner is defined as the physical person that ultimately controls the covered licensee, whether directly or indirectly, through at least 25% of the capital or voting rights or through effective control. If no Real Beneficiary is determined, the physical person who is in charge of the Senior management shall be deemed as the Real Beneficiary.
  • Covered Companies are required to designate an individual who the Registrar may contact in relation to any disclosure, however, companies listed on regulated markets shall be exempt from such requirements.
  • Existing companies operating in the UAE and covered under the scope of the Regulation will be required to create and maintain: 1.) Register of Real Beneficial Owners; and 2.) Register of Partners or Shareholders including details of nominal management member.
  • There is a requirement for information in these registers to be submitted to competent licensing authorities within 60 (sixty) days from the day following the date of publication of the Regulation or from the date of licensing.
  • Covered Companies must notify the competent licensing authority of any change or amendment to the information provided within 15 days of such change or amendment.

Submission

As prescribed by the Regulation, all the covered companies under the scope should submit the required registers to the relevant registrar or licensing authority within the below mentioned stipulated timeline.

Deadline

As the Regulation has been enacted on 28 August 2020, the deadline for submitting the details of the Real Beneficiaries for existing entities covered under the scope shall be within 60 days from the date following the date of publication. In addition, the Regulations also refers to certain other sub-deadlines which the Covered Companies should adhere to.

Administrative Sanctions

In case of a violation of the Regulation, The Minister or the Licensing Authority, shall impose one or more administrative sanctions. The administrative sanctions are not yet specified in the Regulation.

Conclusion and Way Forward

In a short span of time, UAE has taken substantial steps in strengthening its regulatory framework. But outside of the DIFC and ADGM, the two financial centers, there was a pressing need to standardize ongoing compliance requirements in commercial free zones and mainland. This is what the Regulation broadly intends to address and also enhance its cooperation with international authorities.

In view of the above, companies should immediately review their existing structure, collate the relevant data and ensure to comply with the requirements within the stipulated time frame.

How can PKF assist?

  • PKF can review the existing structure of the organization;
  • PKF can assist identifying the Real Beneficiaries;
  • PKF can assist you in submitting the information to the relevant licensing authorities in the prescribed format

Contacts

You may email us or can contact any of our team members relating to your queries on this subject:

Stany Pereira Sarika Dhameja Chaitanya Kirtikar Deepak Karkera

Stany Pereira

Managing Partner

stany@pkfuae.com

Sarika Dhameja

Director – Tax Services

sdhameja@pkfuae.com

Chaitanya Kirtikar

Senior Manager – Structuring Services

cgk@pkfuae.com

Deepak Karkera

Manager – Structuring Services

deepakkarkera@pkfuae.com