Beneficial Owner Procedures

Beneficial Owner Procedures

Ultimate Beneficial Owner term is noticed in many Regulations. Beneficial Owner is nothing but the Natural Person ultimately holding the Legal Person. The reference to Ultimate Beneficial Owner can be found in Economic Substance Regulation & Country by Country Regulation in the UAE. UAE has promulgated Cabinet Decision No. (58) of 2020 Regulating the Beneficial Owner Procedures which is in line with Federal Decree-Law No. (20) of 2018 on Anti-Money Laundering and Combating the Financing of Terrorism and Financing of Illegal Organizations and Cabinet Decision No. (10) of 2019 on the Executive Regulations of Federal Decree-Law No. (20) of 2018 on Anti-Money Laundering and Combating the Financing of Terrorism and Financing of Illegal Organizations.

What is the Objective & Scope of the Decision?

The objective of the Decision:

  • Maintain UAE’s economic position with International requirements
  • To regulate minimum obligations in disclosure of Beneficial Owners, Shareholders, Partners & Nominee Board Members
  • To have effective & enduring regulatory mechanism & procedures for the beneficial owner data

Scope of Application:

  • Cabinet Decision No 58 of 2020 is applicable to all Legal Persons (having separate Legal Identity) licensed & registered in the UAE i.e. Legal Person in the UAE Mainland & Non-Financial Free Zones
  • Provisions the Decision shall not apply to:
  • Companies which are wholly owned by Federal or Local government, or other companies which are owned by such Companies (100% Subsidiaries of Companies held by Federal or Local government)
  • Financial Free Zones (e.g. ADGM, DIFC)

Who can be termed as Beneficial Owner or Real Beneficiaries?

As per Cabinet Decision, Beneficial Owner or Real Beneficiaries will be determined as below:

  • A person who ultimately owns or controls the Legal Person which can be either direct or indirect ownership or control, which means holding 25% or more of shares or voting rights in the Legal Person or having ownership or control by other means such as the right to appoint or remove the directors.
  • Joint ownership or control by 2 or more natural person in Legal Person will also qualify as Beneficial Owners for such ratio
  • In cases where direct Beneficial Owner cannot be identified then, the natural person who controls the Legal Person by other means of control shall be deemed as the Beneficial Owners; or if still Natural Person is unidentified then Natural Person who holds Higher Management position (taking major decisions for the Legal Person) shall be deemed as the Beneficial Owners.

What are the Role & Responsibilities of Legal Person:

  • Legal Person should provide all the required details at the time of licensing & registration.
  • It should clearly mention its trade name & address in the UAE in all correspondence and documents
  • Issue notices to Beneficial Owners where there is doubt on the real beneficiary
  • Maintain and provide the details on Beneficial Owner in the Register and shall update the same within 15days of becoming aware of any changes
  • It shall keep and maintain Register of Partners or Shareholders and must update the same within 15days of becoming aware of any changes
  • Furnish the Registrar with the data contained in the Register of Beneficial Owner and Register of Partners or Shareholders within 60days from the date of enactment of Decision(Date of signing Cabinet Decision 58/2020 24th August 2020) or date of licensing or registration of Legal Person.
  • Provide the data or documents as requested by the registrar and disclose the same with personnel or authorized agents
  • Cases, where the Legal Person has made any amendment or change in data or information filed with Registrar, shall notify the Registrar within (15) fifteen days of the date of making the amendment or changes.

Duties of Nominee Board Member

  • Any Manager or Board Member who acts as Nominee Board Member will have to inform the Legal Person of his Nominee Board Membership and shall provide all the details and information in relation to Register of Shareholders or Partner to Legal Person within 15days of becoming Nominee Board Member or on any changes in information previously shared.
  • In the case where Nominee Board Member ceases from its role, this should be communicated to Legal Person within 15days of its Cessation.

In the case of Dissolution or Liquidation of Legal Person?

  • In the case where the Legal Person is in process of Dissolution or Liquidation, Liquidator shall provide the Registrar with Register of Beneficial Owner and Register of Partners or Shareholders (if any) within 30days of its appointment
  • The Legal Person, its managerial body, the liquidator or other person responsible for the dissolution affairs shall keep & maintain all the records, data & documents for at least 5 years from the date of dissolution, liquidation or de-registration.

In case of non-compliance or violation of any of the provisions of the Decision to attract one or more sanctions from Minister of Economy or Licensing Authority.

For support and more information on Beneficial Owner Procedures:

  • CA. Manu Palerichal, CEO & Partner

M:+971502828727| E:manu@emiratesca.com

  • Purvi Mehta, Asst. Manager – International Taxation

M:+971522800480| E:purvi@emiratesca.com

  • CA. Dhara Yagnik, Manager – Audit & Taxation

M:+971565956836| E:dhara@emiratesca.com

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