On 24 August 2020, the UAE Cabinet published Cabinet Decision no. 58/2020 on the Regulation of Procedures related to Real Beneficiaries (the “New Cabinet Decision”). The New Cabinet Decision requires companies licensed to carry on business in the UAE to maintain a Register of Partners (or Shareholders) and a Register of “Real Beneficial Owners”.
A “Real Beneficial Owner” is defined as the individual that ultimately owns and or controls the licensed UAE company, whether directly or indirectly, through at least 25% of its capital.
What does this mean?
- Most companies licensed to operate in the UAE will be required to create and maintain a Register of Real Beneficial Owners and a Register of Partners (or Shareholders) by 26 October 2020. According to MBI’s discussion with the UAE Ministry of Economy (“MOE”) this deadline has been confirmed. We are happy to assist any of our clients in preparing the required registers.
- There is also a requirement for information from these registers to be submitted to competent licensing authorities. According to the New Cabinet Decision, new and existing companies are required to submit these registers to the Department of Economic Development of the relevant Emirate (“DED”). According to MBI’s recent discussions with the DED and the MOE, it is our understanding that, the DED have not received any submissions yet, however, the MOE has explicitly confirmed that they will be coordinating with the DED to ensure that they can start receiving the required information, though it is not clear whether that will be possible to do in practice at the moment. In addition, the MOE confirmed to us that the deadline of 26 October 2020 has not been extended.
- Under the New Cabinet Decision, the competent licensing authorities are under an obligation to maintain the confidentiality of information submitted to them. MBI understands from their discussions with the DED that the Real Beneficial Owners information will not be disclosed to the public or be set out in the company’s license.
The New Cabinet Decision applies to all companies licensed in the UAE, except for the following:
- companies in financial free zones (Abu Dhabi Global Markets and Dubai International Financial Centre), which have their own rules in this regard. For example, Abu Dhabi Global Markets has issued requirements in this regard and which are aligned with the New Cabinet Decision.
- companies which are wholly owned, directly or indirectly, by federal or Emirate government; and
- companies licensed in the UAE which are ultimately listed on a market/exchange are exempt from certain of the requirements in the New Cabinet Decision, as they are subject to robust transparency rules on Real Beneficial Owners. MBI has confirmed this with the MOE.
Although the New Cabinet Decision specifies that penalties may be applicable for failure to comply, such penalties have not been confirmed by the authorities yet. However, the MOE has confirmed that the Cabinet of Ministers may upon the recommendation of the Minster of Economy issue a new cabinet decision with the various penalties in this regard. As of today, this has yet to be issued.
MBI is coordinating with the DED and Ministry of Economy to get more clarification on the confidentiality of the information submitted and will keep you updated in this regard.
For any questions or queries, please feel free to contact us.