Declaration of Ultimate Beneficial Ownership in the United Arab Emirates (UAE)
Declaration of Ultimate Beneficial Ownership in UAE: In compliance with the Cabinet Resolution on Real Beneficiary Procedures, also known as Ultimate Beneficial Ownership (UBO) Regulations, enacted on August 28, 2020, companies operating in the UAE are mandated to accurately identify and maintain comprehensive registries of their ultimate beneficial owners. Additionally, companies are required to disclose detailed information regarding these beneficial owners to the respective local authorities, which will in turn maintain their own centralized registers.
In the context of these regulations, “beneficial owners” are defined as individuals who either:
- Own 25% or more of the company’s equity or possess more than 25% of the company’s voting rights;
- Exercise control over the company through other mechanisms, such as the authority to appoint or remove a majority of board members, or exerting significant influence over company decisions.
Our team offers specialized services to assist businesses in the prompt and accurate filing of declarations detailing the company’s shareholders, partners, or ultimate beneficial owners. For existing entities, the submission deadline is set for October 27, 2020. For newly incorporated entities, the required filing takes place during the registration or incorporation process. Our business consultants are also equipped to assist you in providing any supplemental information that may be requested by the Registrar, beyond the standard requirements outlined in the UBO Regulations.
UBO Declaration in UAE – Notification Requirements
Effective October 25, 2020, companies intending to commence operations or redomicile to the UAE must submit, in conjunction with their Articles and Memorandum of Association, duly signed or sealed statutory forms by a minimum of two proposed directors, unless the company opts for a single director structure. Companies are obligated to clearly identify all beneficial owners and explicitly specify the nature and extent of the beneficial interests held by each ultimate beneficial owner. The Department of Economic Development (DED) and other licensing authorities will not proceed with the registration process unless they are fully satisfied that the submitted declarations meet the criteria set forth in the specific governing regulations.
Existing business entities are also required to update their UBO information with the Registrar of Companies. Required information includes the names of senior management, the business name, its legal structure, articles and memorandum of association, and the address of the company headquarters, among other details.
How We Can Assist You in Regulatory Compliance
In light of the recent regulatory changes, corporate entities registered and licensed in the United Arab Emirates are now mandated to maintain comprehensive registers and submit specific information to local authorities. These updates necessitate a thorough examination of company ownership structures. At MP Elites Consulting, our team of seasoned business consultants in the UAE is adept at providing specialized guidance in this area.
We offer a full suite of services designed to assist businesses in maintaining accurate registers, making timely updates, and adhering to regulations throughout various phases—including incorporation, amendments, and the renewal of licenses and permits. Our proactive approach aims to significantly mitigate the risk of incurring costly fines and penalties due to regulatory violations.
Key Registers for Full Compliance:
Ultimate Beneficial Owner (UBO) Register
An Ultimate Beneficial Owner (UBO) is defined as an individual who possesses significant control or ownership over a company. To qualify as a UBO, an individual must hold a minimum of 25% shareholding in the company. This ownership may be either direct or indirect. In instances where no individual meets this criterion, any person exerting substantial control over the company will be designated as the UBO.
Register of Directors or Managers
This register encompasses details concerning managers or directors who are acting on behalf of third parties, thereby capturing the full scope of authority and decision-making within the organization.
Partner or Shareholder Register
This register enumerates specific ownership interests held by each shareholder or partner, along with associated voting rights. It may also include additional information deemed necessary by regulatory authorities.
Our expertise in navigating the complex landscape of UAE corporate governance makes us an invaluable partner in ensuring your business stays compliant with evolving regulations.
Compliance Requirements and Legal Consequences
Non-compliance with the mandates outlined in the Beneficial Owners Procedures Regulations may result in various legal repercussions for the company, its officers, beneficial owners, and shareholders. In some instances, penalties may accrue daily until the violation is rectified. Our expert team can guide you in averting the following common violations:
- Neglecting to maintain a comprehensive record of beneficial owners
- Delayed reporting or failure to furnish the Registrar of Companies with timely updates on changes in beneficial ownership
- Failing to submit a declaration to the Registrar of Companies containing accurate information about beneficial owners
- Inability to secure and maintain precise, current, and complete information about beneficial owners within six months of the publication of these regulations
Important Notice: Any shareholder, officer, or beneficial owner who knowingly or recklessly submits false, misleading, or deceptive information to the Registrar is subject to criminal prosecution, as provided by law.
Liability Exemptions in the UAE: Officers in a UAE-based company are exempt from liability for failure to maintain records of ultimate beneficial owners, provided that sufficient evidence is submitted to demonstrate adherence to the regulations, completion of due diligence requirements, and lack of fault due to negligence, omission, or deliberate action on their part.
Notification Timeline: Amendments to any information registered with the authorities must be reported within 15 days from the date of implementation. Regarding companies in the process of liquidation or dissolution, appointed liquidators are obligated to provide the Registrar of Companies with verified copies of updated Ultimate Beneficial Owner (UBO) registers within 30 days of their appointment.