UAE companies required to keep beneficial ownership register

The UAE issued Cabinet Resolution No. 58 of 2020 on the Regulation of the Procedures of the Real Beneficiary, which came into force on 28 August 2020, to introduce a requirement for a beneficial ownership register in the UAE mainland and to unify the minimum disclosure requirements for corporate entities incorporated on the UAE mainland and in the non-financial free zones.

All companies in the UAE, both mainland and free zone companies – with the exception of companies incorporated in the financial free zones (Abu Dhabi Global Market and Dubai International Financial Centre) or companies wholly owned by the federal or local government – are now required to compile and keep at their office premises:

• A register of beneficial owners – to include name, nationality, place of birth, residential address, travel ID card number and date of issuance and expiry, reason why the individual is classified as a BO and the date on which the person became a BO or ceased to be a BO;
• A register of shareholders / partners – to include the number of ownership interests held by each shareholder of partner and the voting rights attached and the date of acquisition. For physical persons, the register should include their full names, nationality, address, place of birth, employer name and address and a ID or travel document copy. For legal persons, the register should include their constitutional documents, address and details of their senior management;
• A register of nominee directors – to include full names, nationality, address, place of birth, employer name and address and a ID or travel document copy.

The Resolution defines a real beneficiary as a physical person who owns or controls at least 25% of a company’s shares. If no such person is identified, then the real beneficiary is a physical person who exercises control over the company, and in the absence of either of the above, the real beneficiary is the senior manager of the company. Companies will also have to keep a register of any nominee directors who act in accordance with the guidelines or instructions issued by another person.

Companies are required to file information relating to the shareholders and beneficial owners with the relevant registrar or licensing authority responsible for supervising the various types of establishments registered in the UAE by 27 October 2020.

Each company must take reasonable steps to ensure transparency, to obtain accurate information in respect of the beneficial ownership, and to update the information on the registers on an ongoing basis. Any change or amendment to the information provided should be notified to the relevant registrar within 15 days. Each company must also designate an individual who the relevant registrar can contact in relation to any disclosure.

Companies that are listed on qualifying stock exchanges or companies that are owned by such listed companies can rely on the disclosures made to the relevant stock exchange rather than making independent inquiries as to the beneficial ownership.

The information contained within companies’ registers will be kept confidential by the UAE Ministry of Economy and the relevant registrar. Administrative penalties may be imposed on companies that fail to comply with the new Regulations.

The OECD Global Forum rated the UAE Largely Compliant with the international standard of transparency and exchange of information on request last November, recognising that it had improved its internal processes to obtain and exchange information. However, it said, the large amount of requests remained a challenge and that the UAE needed to ensure that its beneficial ownership framework was effectively implemented.

Sovereign welcomes this move, which will assist in the effective implementation of the UAE’s beneficial ownership framework. We would be pleased to advise on whether and how these regulations apply and to provide guidance on how to achieve and maintain compliance.