The UAE, as an economic hub for investment and growth, has implemented numerous compliances measures to combat money laundering and terrorism financing.
One such measure, in line with the UAE government’s objectives, is beneficial ownership. It is paramount to establish a concise ownership structure of companies incorporated within the UAE.
The directive requires companies to maintain information regarding beneficial ownership, shareholders, and other relevant members. Article (4) of UAE Cabinet Resolution No. (58) of 2020 (“Resolution”) mandates that the legal person should be licensed and provide the following basic data:
1. Name, legal form, and memorandum of association.
2. Head office address or the principal address of the business and, in case of a foreign legal person, the name and address of its legal representative in the state, with a proof thereof.
3. Articles of Association or any-other similar documents approved by the relevant entity in the state.
4. Names of the relevant persons who are holding higher management positions in the Legal Person, providing their data from their passports or identity cards, including such documents’ numbers, issuance and expiry dates, and issuing entity.
5. The legal person may not be licensed or registered under a trade name that is previously registered in the state or in similar name to the extent that it may lead to confusion.
6. The legal person shall not use a name other than its registered name, and such name bust be followed by the legal form of the Legal Person. The Legal Person may submit an application to the registrar to change its trade name and in case of the approval, the legal person shall not use the cancelled name. All correspondence and documents of the legal person shall clearly state its trade name and address in the state.
7. The legal person shall have a clear, detailed and registered address in the state and to notify the registrar thereof. Such address shall be used in all correspondence and notices to be served on the legal person.
Moreover, Article (11) of the Resolution mandates the following:
1. The legal person shall, within (60) sixty days of the promulgation date of this decision or date of licensing or registration of the legal person, furnish the registrar with the data contained in the register of beneficial owner and register of partners or shareholders and shall carry-out the reasonable procedures to protect its registers from loss, damage, or destruction.
2. The legal person shall provide any additional information as may be required by the registrar within the specified duration.
3. Subject to the legislation in force, the legal person shall furnish the registrar with all data referred to in clause (1) of Article (4) hereof, upon submitting the application of incorporation, licensing, registration, renewal, amendment, or any other procedures as the registrar may deem proper to this effect.
4. The legal person shall provide the registrar with the name of a natural person residing in the state and authorized to disclose to the registrar all data and information required by the mentioned federal decree-law or the executive regulations or this decision, along with his address, contact numbers and a copy of his valid passport or ID.
5. The licensed or registered legal person in the state may not issue bearer share warrants.
6. The legal person shall, on the issuance of shares in the name of persons or board members, disclose to the registrar the date in respect of such shares and the identity of such persons or board members within (15) fifteen days of such issuance.
7. If the legal person is in the process of dissolution or liquidation, the liquidator shall hand-over to the registrar a copy of the beneficial owner register and register of partners or shareholders, if any, or a true copy thereof within (30) thirty days of his appointment.
8. The legal person, its managerial body, the liquidator, or other person responsible for the dissolution affairs of the legal person shall keep, maintain the records and all data referred to herein for at least (5) five years after the date of dissolution, liquidation or de-registration.
As prescribed under Cabinet Resolution No. (53) of 2021, administrative penalties shall be enforced against violators of the provisions of Cabinet Resolution No. (58) of 2020 regulating Beneficial Owner Procedures.
The UAE Ministry of Economy has provided clarity and guidance regarding the risks and vulnerabilities of Nominee Shareholders and Directors.
Although a common phenomenon, nominee arrangements pose risks, that must be mitigated to ensure transparency.
For further information related to such nominee arrangements, please refer to the circular issued by the UAE Ministry of Economy.