Episode 20 − Ultimate Beneficiary Ownership − Q&A
In our twentieth episode, Kath Zagatti, legal director, joins Yann Mrazek, Managing Partner at M/HQ, to discuss important questions of the ongoing UAE UBO regulations’ impact in practice on UAE structures and foundations in particular.
[Yann Mrazek] What are the UBO Regulations?
[Kath Zagatti]
Uniformized minimum disclosure requirements for UAE-incorporated corporate entities with respect to shareholders, ultimate beneficiaries and directors. Cabinet Resolution No. 58 of 2020 on the Regulation of the Procedures of the Real Beneficiary (UBOr) came into effect on 28 August 2020.
UBOr are 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] Why the UBOr? Why now?
[KZ] Substantial resources have been put towards the UAE’s AML/CFT strategy, an item 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 Regulations tackle.
[YM] What obligations are mandated by UBOr?
[KZ] Companies must identify their Beneficial Owner(s) and Nominee Director(s) and submit to the competent authorities i) the Shareholders’ Register, ii) the BO Register, and iii) the Directors Register.
[YM] What is a UBO?
[KZ] A real beneficiary as a physical person who owns or controls or has a right to vote over at least 25% of a company’s shares. Companies can have several real beneficiaries.
[YM] What if the company cannot identify the UBO?
[KZ] 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 any of the above, the real beneficiary is the senior manager of the company.
[YM] What is a UBO?
[KZ] A real beneficiary as a physical person who owns or controls or has a right to vote over at least 25% of a company’s shares. Companies can have several real beneficiaries.
[YM] What is a Nominee Director?
[KZ] A Nominee Director is a natural person serving in a director capacity, and acting in accordance with guidelines, instructions or will of another person.
[YM] How can I prepare and submit the registers?
[KZ] UAE’s various registries are free to adopt their own approach towards filing – i.e. notification scope, process, format, deadlines. To help navigate this administrative maze, M/HQ has compiled a “UBOr Tracker” highlighting key procedural steps of most relevant UAE registrars with respect to UBO ongoing compliance.
See our latest tracker, here
[YM] Are there any deadlines to be met?
[KZ] Yes. Nominee Directors serving in such capacity must have notified the company by 23 September 2020. All companies are required to submit UBO information to the relevant Registrar 60 days from UBOr entering into force or within 60 days from the date of a company’s license renewal issuance, whichever comes first.
[YM] Do all companies in the UAE need to adhere to the deadline?
[KZ] The Regulation do not apply to companies established in the UAE’s financial free zones (DIFC and ADGM), or to companies wholly owned by the federal or local government.
[YM] What if the company was setup in 2020, does it still need to adhere to the deadline?
[KZ] The company would have most likely already complied with the Regulations at the time of registration. If that is the case, no further action is needed in that respect.
[YM] What happens to the information shared in the registers?
[KZ] The information contained within companies’ registers will be kept confidential by the relevant authorities.