Identifying the ultimate beneficial owner is a primary requirement as per Anti-Money Laundering laws (AML). As a result of its strong commitment to fight money laundering and financing of terrorism, the UAE government has issued Cabinet Decision No 58 of 2020 on Ultimate Beneficial Ownership (UBO). In line with the Resolution, companies registered with offshore, free zone and mainland authorities are required to disclose the details of their real beneficiary owner to the regulatory authorities. The requirement may seem complex, but the entities can hire providers of UBO compliance services in Dubai to navigate the requirements.
The resolution has imposed new procedural requirements for the companies operating in the UAE. Mainly, the companies under obligation must prepare, submit and maintain three registers: Real Beneficiary Register (RBR), Partners or Shareholders Register (PSR) and Nominee Directors Registry. Failing to comply with these regulations may attract hefty penalties along with reputation damage. Entities struggling to ensure compliance can consult with the best UBO advisors in Dubai.
Definition of Ultimate Beneficial Owner
The Cabinet Decision No. 58 of 2020 defines an ultimate beneficiary owner as any one of the following:
- Any natural person who owns or controls directly or indirectly at least 25% of the share capital
- Any natural person with voting rights for at least 25% of the shares
- Any natural person with ultimate control over the legal person
Key Requirements Related to Ultimate Beneficial Ownership
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Companies under the UBO obligations must meet the following requirements:
Preparing & Filing Real Beneficiary Register
The RBR should include details of the beneficial owner, such as full name, nationality, date & place of birth, place of residence, address for sending notifications, passport or ID number, country and date of issue and expiry, basis and date on which the person became a real beneficiary; and the date on which the person ceases to be a real beneficiary. After preparing the register, it should be submitted to the relevant regulatory authority. Availing of UBO compliance services in Dubai can help the companies prepare and file the RBR register.
Preparing & Filing Partners or Shareholders Register
For the PSR, companies must maintain details of partners or shareholders as set out in the Cabinet Decision. The firms must also update the PSR with any change occurring within 15 days from the date of the change. The PSR must include details such as the number and class of shares each partner or shareholder owns in the company and the date on which they became a partner or shareholder.
Preparing & Filing Nominee Director / Manager Register
If applicable, the companies should prepare, submit and maintain a register for Nominee Director / Manager. The register should include details of Directors / Managers acting by the instructions of another person. UBO advisors in Dubai can help the companies prepare and submit the Nominee Director / Manager Register.
Requirements for Companies under Liquidation
Apart from the operating entities, companies undergoing liquidation in the UAE also need to meet UBO requirements. Companies under liquidation should submit the RBR & PSR or its true copy to the Registrar within 30 days from the date of the liquidator’s appointment. Apart from that the liquidators or administrators must maintain the Registers for at least five years from the date of liquidation.
Companies Exempted from Ultimate Beneficial Ownership
The requirement to disclose the details of the Real Beneficiary applies to all the companies incorporated on the mainland as well as the companies licensed by the free zones. However, the following entities are exempted from the purview of Cabinet Decision No. 58 of 2020:
- Companies Registered in Financial Free Zones (DIFC, ADGM)
- Companies owned by the Federal government & its Subsidiaries
Penalties Related to Real Beneficiary Disclosure
The UAE government stringently enforces the UBO regulations with a set of hefty penalties imposed on the violators. The government issued Cabinet Decision No. 53 of 2021 to ensure the strict enforcement of UBO regulations in the UAE. The following are some of the key violations and the corresponding UBO penalties specified in the Cabinet Decision:
- AED 50,000 for the first time & AED 100,000 with the suspension of trade license for 12 months in case of repetition for companies failing to create the UBO registers
- AED 20,000 (for the first time) & AED 40,000 with the suspension of trade license for at least six months (for subsequent repetition) for companies failing to include the mandatory details in the registers
- AED 10,000 (for the first time) and AED 20,000 with a suspension of trade license for at least one month (for subsequent repetition) for companies that fail to maintain adequate, accurate, specific and updated data of Beneficial Owner or fail to accurately record the Beneficial Ownership
- AED 20,000 (for the first time) and AED 40,000 along with restriction of the powers of the board members or directors (for subsequent recurrence) for companies that fail to disclose the mandatory data regarding the details of the director or nominal board member
- AED 50,000 (for the first time), followed by a fine of AED 100,000 and suspension of the trade license for at least Twelve (12) Months (in case of the violation repeats) for companies that fail to create the PSR
- Fine of AED 30,000 (first instance) followed by a penalty of AED 60,000 and suspension of the trade license for at least six months (in case of repeating the violation) for companies failing to maintain the information in all partners or shareholders in the PSR
- A penalty of AED 15,000 will be imposed on companies that fail to provide information on RBR, and PSR and fail to maintain the registers safe from damage, loss or destruction. Subsequent occurrences of the violation will lead to a fine of AED 30,000 and suspension of the trade license for at least three months
- AED 5,000 (for the first instance) and AED 10,000 and suspension of the trade license for at least one month (subsequent occurrence of the violation) for companies that fail to provide any additional information requested by the Registrar
- Companies must disclose to the Registrar the name of the UAE-resident individual who holds the responsibility to disclose all the mandatory days and information. Failure of this obligation will incur a first-time penalty of AED 1,000 and a penalty of AED 2,000 and suspension of the trade license for at least one month for repeating the violation
- A company that fails to issue shareholder’s share guarantees will incur a penalty of AED 5,000 in the first instance and a penalty of AED 10,000 for further recurrence of the violation
- Companies should provide the Registrar with information on shares and stocks issued to persons or board members. They should also disclose the identity of such persons or board members to whom the shares or stocks were issued. Failing to do so within fifteen days of issuance will attract a penalty of AED 5,000 in the first instance and AED 10,000 and a restriction of the powers of the board members, directors or owners if the crime is repeated.
- AED 5,000 fine will be imposed on companies under liquidation that fail to hand over to the liquidator the Register of Beneficial Owner and Register of Partners or Shareholders within Thirty days of appointing the said liquidator. The fine will escalate to AED 10,000 and suspension of the trade license for at least one month if non-compliance is repeated.
- Companies under liquidation will incur a penalty of AED 20,000 if the administrator or the liquidator fails to maintain the mandatory records and registers for at least five years from the date of dissolution, liquidation or de-registration. If the violation is repeated a penalty of AED 40,000 will be incurred.
The Best UBO Compliance Services in Dubai, UAE
As the UAE is stringently enforcing AML-related compliance requirements such as the UBO, companies should tread the waters carefully. Non-compliance may lead to hefty penalties, suspension of trade license and reputation damage. An efficient way to navigate the complex system of Uno compliance is to seek the advice of the best UBO consultants in Dubai such as Jitendra Business Consultants (JBC). We are one of the leading providers of UBO services in Dubai with a reputation for saving our clients from hefty penalties.
JBC has a team of UBO advisers in Dubai who have in-depth knowledge about the UBO compliance landscape. Our consultants can advise the companies on the creation of UBO registers, record-keeping, and maintenance of UBO registers. If any penalty is incurred, JBC can appeal on behalf of the clients. Business owners who are confused about UBO compliance requirements can consult with our UBO advisors in Dubai.