Revisions to UBO Regulations in the UAE
The UAE has made revisions to its Ultimate Beneficial Owner (UBO) regulations through Cabinet Decision No. 109/2023, which was issued on 16th November 2023, to replace the previous Cabinet Decision No. 58 of 2020.
What is an Ultimate Beneficial Owner?
The new regulation defines the UBO of a legal person as a natural person who either directly or indirectly owns or controls at least 25% of more of the legal entity’s capital.
In the absence of such an individual or in the case of doubt, then the natural person who exerts control over the legal entity through alternate means is considered to be the UBO.
In the event that no natural person with UBO can be identified, then the natural person who is the Senior Management Officer will be considered the UBO.
What are the key updates to the UBO regulation in the UAE?
1. The new UBO regulations in the UAE apply to all licensed legal persons, excluding:
- Financial Free Zones.
- Companies owned by Government or their subsidiaries.
- Governmental Partners - a government entity that contributes or owns shares in a company.
2. The updated regulation mandates that all companies or legal persons licensed or registered in the UAE have to keep Registers of UBOs, Partners or Shareholders, and Nominee Management Members.
3. For companies operating in Mainland or Free Zone jurisdictions the disclosure requirements are unchanged.
4. A “Nominal Board Member” is a natural person that acts on the behalf of another, and has a position in the legal entity, represents shareholders or other relevant entities. The details of the Nominal Board Member must be included in the Register of Partners or Shareholders.
5. A Registrar is appointed, which is the Authority for overseeing the trade names register for various establishment types in the UAE.
- The Registrar can employ a risk-based approach to identify UBOs in legal entities that have a complex structure.
- The Registrar is also tasked with ensuring that legal entities within its jurisdiction are not misused for money laundering and financing terrorism.
6. In order to ensure that anti-money laundering and the combating of financing terrorism is maintained, a supervisory Supreme Committee is to be established.
7. The Registrar and the Ministry cannot disclose information about the UBO, or the Register of Partners or Shareholders, without written approval from the UBO or the Nominal Management Member.
What are the potential penalties for non-compliance?
The Cabinet Decision No. 132/2023, which was issued on 15th December 2023, for Administrative Fines for Violations of Cabinet Decision No. 109/2023, to replace Cabinet Decision No. 53/2021.
In cases of violation of the regulations, such as not making a UBO declaration in the UAE, the Registrar may impose penalties. These penalties range from a notice of written warning, which gives 30 days’ notice to make the necessary changes, to fines of up to AED100,000.
Individuals that are affected by penalties may file a grievance with the Grievances Committee against the administrative penalties being imposed, within 30 days of notification, and may request a suspension or penalty implementation. The Committee will then make a decision on the grievance filing and the penalty within 45 working days of the request.
How can PRO Partner Group help?
At PRO Partner Group, we have decades of experience with providing corporate services in the UAE and the wider GCC, with a dedicated compliance team who have a great understanding of the UBO regulations in the region.
Navigating UBO regulations in the UAE requires careful consideration and adherence to the regulatory requirements. PRO Partner Group can assist you in following these requirements to ensure your organisation is best equipped for success.
If you need assistance with UBO regulations, or any other related compliance, PRO support matter, onshore or offshore company setup, restructuring, or local partner in the UAE, Abu Dhabi, Dubai, the wider UAE, Oman, Qatar, or Saudi Arabia then please do get in touch with us on +971 (0)2 448 5120 for Abu Dhabi or +971 (0)4 456 1761 for Dubai, email us at info@propartnergroup.com or complete the contact form below and we will be delighted to assist you.Top of Form
