Ultimate Beneficial Owner

The UAE Cabinet had passed a new Cabinet Resolution No. (58) of 2020 on 28th August 2020 which replaced the existing Cabinet Resolution No. (34) of 2020 which was passed earlier the same year.The resolution was passed by the cabinet to strengthen the government policies against money laundering and financing for terrorism activities through strict compliance with the Anti-Money Laundering (AML) and Combating Financing of Terrorism (CFT).

The UAE cabinet resolution mandates every entity functioning in the state to record the details of beneficial owners. An exemption from maintaining the records is provided to the entities owned by the state or the federal entities and the entities functioning in the financial free zones.

As per the new cabinet resolution, the entities are required to maintain two separate registers:

Register of partners/ share holders
Register of beneficial owners

Articles (1) to (20) of the Cabinet Resolution No. (58) of 2020 states the provisions for UBO.

While the articles (1) to (3) explains the scope and objectives of the decision,
Article (4) states about the Licensing or registration of the Legal Persons
The legal person shall be registered or licensed in the state shall provide all the necessary information:
Name, legal form and memorandum of association.
Head office address or the principal address of business and, in case of a foreign Legal Person, the name and address of its legal representative in the State, with a proof thereof.
Articles of Association or any-other similar documents approved by the Relevant Entity in the State.
Names of the relevant persons who are holding higher management positions in the entity should provide the data from their passports or identity cards, including the documents’ numbers, issuance date, expiry dates and the details of the issuing entity.
The legal person should have a clear register in the state, and should not use a name that is already registered in the state.

Article (5): Identification of the Beneficial Owner

The beneficial owner of an entity is identified under the following criteria:
A beneficial owner usually owns 25% of the share in an entity or more as prescribed by the company or is determined according to the voting rights.
If two or more persons hold the specified shares of an entity, they are also considered as beneficiary owners.
In the absence of partners, the manager of the entity will be considered as the beneficial owner.
In the absence of the partners or managers, the highest authority in the entity will be considered as the beneficial owner.

Article (6): Transparency and Beneficial Owner

Every entity must maintain the records of the beneficial owners. It is not applicable for the entities listed in the public stock exchange, as it mandates the details for registration of the same. The records must include details like:
Name of the beneficial owner
Date and place of birth
Permanent address
Qualification list
Identity card details or passport details
Date of being appointed as the beneficial owner
Date of being ceased as a beneficial owner

Article (7): Notices of Beneficial Owner

If the Legal Person believes that a person could be a Beneficial Owner whose ultimate beneficial ownership data are not correctly recorded in the Register of Beneficial Owner, the Legal Person shall inquire as to the person’s status as a Beneficial Owner. If (15) fifteen days have lapsed without any response to such inquiry being received, the Legal Person shall give such person a notice thereof.

Article (8): Register of Beneficial Owner

Records of the beneficial owner must be maintained by the entity which should include the details of:
Name of the beneficial owner
Date and place of birth
Permanent address
Qualification list
Identity card details or passport details
Date of being appointed as the beneficial owner
Date of being ceased as a beneficial owner

Article (9): Nominee Board Members

The manager or board member who acts as a nominee board member must inform the Legal Person that he/she is a nominee board member with all the necessary documents as stated in Article (10) of the resolution. Separate records for the same must be maintained for the same as well.

Article (10): Register of shareholders/partners

Legal Person must maintain a register to record the information of each shareholder and partner. The register must be updated by the Legal Person in case of any change within 15 days of being aware of the changes. The details to be recorded in the register are:

Number of shares held by each of them along with their categories and associated voting rights.
Date on which such partner or shareholder acquire that capacity in the Legal Person.
In case of natural partners or shareholders: the full name as it appears on the identity card or the passport, nationality, address, place of birth, name and address of employer and a true copy of the valid passport or ID.
In case of corporate partners or shareholders: the data stated in Clause (1) of Article (4).
Articles (11) to (13) states about the register and its obligations.

Article (14): Change of data

Any changes in the record regarding the details of the beneficial owner or partners or shareholders must be updated by the Legal Person within 15 days of being aware of the change.

Article (15): Data Confidentiality

The Ministry and Registrar shall not disclose to any person the data contained in the Register of Beneficial Owner or the Register of Partners or Shareholders, without a written consent of the Beneficial Owner or the Nominee Board Member.
Articles (16) to (20) speaks about the domestic and international cooperation and the grievances and repeals of the resolution.

Maintaining the records of the beneficial owners have been made mandatory through the new cabinet resolution to ensure the genuineness of an entity functioning in the state.

Our business consultants at Carvy can assist you in:

Providing consultancy services related to UBO declaration
Assistance in preparing and maintaining the registers
Updating the records in the registers

Carvy is one of the leading business consultants in UAE. Our professionally qualified and experienced team of experts will assist you in every possible way. We ensure to provide the best quality services to our clients with our deep knowledge and prowess.

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Sojen Manjila, Partner

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