1. What is Real Beneficiary Regulation?
The United Arab Emirates (UAE) recently issued Cabinet Decision No. 58/2020 on the Regulation of Procedures Related to Real Beneficiaries (“the Regulation”) or Ultimate Beneficial Owners(UBO), which came into effect on 28 August 2020 and repealed Cabinet Decision No. 34 of 2020 issued earlier this year.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 establishing real beneficial owners, combating antimoney laundering crimes, the financing of terrorism and financing of unlawful organization, and likelihood of battling tax avoidance and providing greater transparency to the UAE’s business environment in line with the international guidelines and requirements.
2. Who is covered under the Real Beneficiary Regulation?
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). 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. Furthermore, entities held by individual shareholders/partners are not covered as per the communication from the licensing authorities.
3. Who is a Real Beneficiary?
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.
4. What is required to be submitted?
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. In practice, the licensing authorities already have the partners/shareholders information on their records and are requesting for register of real beneficial owner. However, each company should maintain the partners register in their file records.
5. When do you need to submit the Real Beneficiary information?
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. However, in practice each authority has set their own timeline for submission. We recommend that the company submits the information at the earliest.
6. Is there any other ongoing compliance in connection with the Real Beneficiary Regulation?
Covered Companies must notify the competent licensing authority of any change or amendment to the shareholder/partners and/or real beneficiary information provided within 15 days of such change or amendment.
7. What happens if an entity is being liquidated/dissolved?
The Company, its management, the liquidator or any other person responsible for the dissolution affairs of the Company shall submit the information to the competent authority and should also keep, maintain the records and all data referred to herein for at least (5) five years after the date of dissolution, liquidation or de-registration
8. What happens if the Covered Companies do not comply?
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.
9. 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