Episode 16 – UBO regulation Filings & Key Obligations
In our sixteenth episode, Kath Zagatti, legal director at M/HQ joins Yann Mrazek, Managing Partner at M/HQ to discuss the new UAE UBO regulations’ impact in practice on UAE structures and foundations in particular.
Key Takeaways
[Yann Mrazek]
The UAE is taking AML/CFT very seriously. Substantial resources have been put towards the topic which is at the top of the policy agenda. In a short time, the country has taken significant steps in strengthening its framework.
But outside of the DIFC and ADGM, there was a pressing need to uniformize ongoing compliance requirements across a vastly fragmented system of registries (39 different company registries) spread between non-financial free zones and the UAE mainland. This is what the Resolution tackles.
[Kath Zagatti] Beneficial Ownership Regulation in a nutshell
The Resolution came into force on 24th August 2020 and is applicable to UAE mainland, Free Zone and Offshore entities, excluding the Financial Free Zones of DIFC and ADGM as they already have in place internal regulations tackling the registration of BO and nominee Directors.
[YM] What an entity must do and by when?
[KZ] Here are the following actions an entity must do:
The deadline for the entities to submit the updated Registers falls on the 23rd of October 2020.
While this exercise is ongoing, it is important to stress that the registration of the information with the Authorities will not be public, unless the written approval of the BO or the Nominee Director is obtained.
[YM] What is the definition of BO and Nominee Director
[KZ]
Pursuant to the Resolution, a Beneficial Owner is:
- A natural person who ultimately owns/controls or has right to vote over at least 25% of company’s share capital, whether through direct or indirect chain of ownership or control, or any natural person who has right to appoint or dismiss majority of directors of the company;
[YM] and if no natural person meets the criteria?
- [KZ] Then, the BO shall be any natural person who effectively manages or administers the company;
[YM] and if no such natural person can be identified?
- [KZ] Then the BO shall be the natural or a legal person who is the senior manager of the company.
[YM] What about the Nominee Director?
- [KZ] a Nominee Director is natural person serving in a director capacity, and acting in accordance with guidelines, instructions or will of another person.
[YM] M/HQ’s top tips
[KZ]
Collect key data; create
- Shareholders’ register
- BOs’ register and
- Nominee directors’ register.
- notify relevant change/amendment [15 days]
- take reasonable steps to ensure transparency / obtain accurate information regarding BO
Forget not to file! 23/10
[KZ]
Although the deadline to submit the Registers is set, so far, the Free Zone Authorities and the Ministry of Economy have yet to published the method though which the entity must submit the Registers. We expect the Authorities to release their guidelines in the upcoming weeks.
In any event, we advise that the entities have the Registers ready beforehand to avoid any potential penalties for not complying with the set deadline.