As the United Arab Emirates (UAE) seeks to bolster its economic substance regulations to comply and align with global trends, companies in the UAE (both onshore and in non–financial free zones) have until October 27, 2020, to maintain a register of beneficial owners, shareholders, and nominee board members. Going forward, newly incorporated companies will also be required to establish such registers within 60 days of their license being issued.

Cabinet Resolution No. 58 of 2020, On the Regulation of the Procedures of the Real Beneficiary (the Resolution), was issued August 24, 2020, repealing Cabinet Resolution No. 34 of 2020, issued May 4, 2020. The Resolution introduces the requirement for companies registered both onshore and in non-financial free zones (each, a Company) in the UAE to maintain a register of beneficial owners, shareholders, and nominee board members (each a Register) going forward, which unifies the minimum disclosure requirements of onshore companies and non–financial free zone companies.

The Resolution, however, specifically excludes from its requirements corporate entities and their subsidiaries that are (1) wholly owned by the federal or local government; and (2) incorporated in the financial free zones of the UAE, namely the Abu Dhabi Global Market and the Dubai International Financial Centre.

A Company that falls within the remit of the Resolution is required to establish and file the relevant Register with the Company’s registrar authority (which for an onshore Company, for example, is the Department of Economic Development of the Emirate in which it is registered).

It is unclear from the terms of the Resolution when any penalties for noncompliance may be implemented. However, it is advisable that Companies abide by the terms of the Resolution before the fast-approaching deadline to avoid any potential negative repercussions, as fines for administrative noncompliance in the UAE range from AED 100 to AED 1,000,000.

WHAT NEEDS TO BE INCLUDED IN THE REGISTERS?

Beneficial Ownership Register

Companies are required to meet the following guidelines:

• The beneficial ownership Register must identify all natural persons who own or control the Company, either through direct or indirect shares or equity of 25% or more, or hold at least 25% of the voting rights.
• In line with the UAE anti-money laundering definition of beneficial ownership, where no natural person is identifiable as per the above, the beneficial owner shall be the natural person deemed to exercise control over the Company by other means (i.e., senior management official).
• The beneficial ownership Register must be accurate and updated on an ongoing basis, and in any event no later than 15 days from the effect of any changes to the beneficial ownership of the Company.
• The Register shall include, for each beneficial owner, the following:
  • Full name, nationality, and date and place of birth.
  • Place of residence or notice address.
  • Passport or identification number, country, and date of issue and expiry.
  • The basis on which the natural person is identified as a beneficiary, and the date on which it acquired that capacity.
  • The date on which the natural person ceases to be a beneficial owner.

Shareholder Register

In addition to the beneficial ownership Register, a Company must maintain a Register setting out details of each partner or shareholder. Any changes must be reflected in the shareholder Register within 15 days from the date of such change, and shall include the following for each partner or shareholder:

• Number and class of shares or equity, and corresponding voting rights.
• The date on which the partner or shareholder was appointed to such capacity.
• For partners or shareholders who are natural persons, the Register shall include the same details that are required of a beneficial owner as set out above.
• For partners or shareholders that are legal entities, the following must be included:
  • Name, legal form, and articles of association.
  • Address of main place of business or headquarters (where the legal entity is foreign, the name and address of its legal representative should be included).
  • Names of the persons holding senior management positions (including their passport or identification number, country of issue, date of issue, expiry date).
• For avoidance of doubt, partners or shareholders that are trusts shall also be included in the shareholder Register.

Board Nominee Member Register

Companies shall also maintain a Register listing details of directors or nominee members as set out for beneficial owners above, and any changes shall be reflected within 15 days.

ADDITIONAL CONSIDERATIONS

Each Register shall be maintained for the life of the Company, and for a period of five years from the date of its de-registration, liquidation, or dissolution.

In the event of liquidation, the appointed liquidator will also be tasked with providing a certified copy of the Registers to the Company’s relevant registrar within 30 days of his appointment.

Interestingly, the Resolution indicates that the Ministry of Economy will also maintain basic information as reflected in the Registers of a Company to facilitate access by competent foreign authorities and to facilitate exchanges of information generally. While details on how such general exchange of information will be implemented are not currently available, this may indicate a move toward wider transparency and availability of information insofar as it relates to companies in the UAE.

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