Overview

On November 6, 2023, the UAE Ministry of Economy published Cabinet Decision No. (109) of 2023 an enhancement of the previous Decision (Cabinet Resolution No. 58 of 2020) on the “Regulation of Procedures Related to Real Beneficiaries”. This Decision mandates companies operating in the UAE mainland and commercial free zones to establish registers of their beneficial owners and shareholders. Additionally, companies are required to submit these registers to the appropriate registrar and licensing authorities.

Objective

• Enhance the business environment of the State's economic standing in alignment with international standards by delineating the essential responsibilities of the Registrar and legal entities within the State.
• To effectively oversee licensing or registration procedures and governing the maintenance of the Beneficial Owner's Record and the Register of Partners or Shareholders.
• Implement robust and sustainable executive and regulatory measures to effectively govern the procedures related to Beneficial Owners, ensuring their efficacy and continuity.

Beneficial Owner or Real Beneficiaries

• A person that ultimately owns or controls, whether directly through a chain of ownership or control or by other means of control such as the right to appoint or dismiss the majority of its Directors, 25% or more of the shares or 25% or more of the voting rights in the Legal Person.
• If no real Beneficiary fits the criteria above, or there is any doubt over who has final controlling, the physical person who exercises control over the Entity through any other means shall be the Real Beneficiary.
• If no physical person is determined, the Real Beneficiary shall be the physical person who holds the position of the person in charge of Senior Management.
• A Real Beneficiary can be made up of more than one person i.e. where more than one person participates in the ownership or control they shall all be dealt with as owners and controllers. In cases where multiple individuals participate in owning or controlling a percentage of the capital in a legal entity, they shall all be regarded as owners and controllers of that percentage.

Scope

Cabinet Decision No. (109) of 2023 is applicable to all Legal Persons (having separate Legal Identity) licensed & registered in the UAE & Commercial Free Zones.

Companies wholly owned by (a) the Federal or Local Government or any other companies wholly owned by such companies, (b) a Financial Free Zones and (c) Governmental Partner are exempted from the provision of the decision.

Registration and Licensing of the Legal Person

• When a legal entity applies for registration or a license, it must provide the registrar with the following key information:
  • The entity's name, legal form, and articles of association.
  • The head office address or main place of business. For foreign entities, the name and address of their legal representative in the country must be provided, along with supporting documents as proof.
  • The statute or any similar document approved by the relevant authority in the country.
  • The names and details of individuals holding senior management positions or managerial roles who have the authority to make decisions. This information must be based on their travel document or civil card, including the document number, issuing authority, and date of issuance and expiration.
• A legal entity may not be licensed or registered under a name that is already registered in the country or under a name so similar that it could cause confusion.
• A legal entity must use only its registered name, followed by its legal form. The entity may apply to the registrar to change its name. If approved, the entity must discontinue the use of the previous name, and all its correspondence and documents must clearly display the new name and address within the country.
• A legal entity must have a clear and detailed address registered in the country, which is notified to the registrar and used for receiving all correspondence and notifications.

Beneficial Owner’s Record

The Beneficial Owner's Record should contain:

• Full name, nationality, date, and place of birth.
• Residence or designated address for notifications.
• Travel document or identity card details, including issuance and expiry dates.
• Basis and date of becoming a Beneficial Owner.
• Date of ceasing to be a Beneficial Owner.

Deadline

Legal entities must establish and maintain a record of Beneficial Owners within sixty (60) days of the issuance of this decision or its existence, updating it within fifteen (15) days of any changes.

If a natural person's name is included in the Beneficial Owner Record without their knowledge, the legal entity must notify them within fifteen (15) days.

Other key requirements:

Every Entity must take reasonable measures to obtain appropriate, accurate and up-to-date data for the Registers and preserve its records from damage, loss or destruction. They must also appoint an individual point of contact (resident in the UAE) and provide the details of that contact to the Registrar.

The Decision details the data to be collected and entered on each respective Register. Any additional data requested by the Registrar shall need to be provided by the deadline specified in the data request.

Entities in a regulated market, in a state of dissolution or liquidation are subject to adjusted filing requirements under the Decision.

Any case of a violation to the provisions of this Decision can result in the Minister of Economy or the Licensing Authority imposing one or more sanctions.

Reference

Cabinet Decision No. (109) of 2023
Cabinet Decision No (132) of 2023 regarding the administrative penalties imposed on violators.

Declaration

You may submit the information required at our e-Portal

Beneficial Owner Procedure Regulation Webinar

Click here to watch the webinar organized in cooperation with the Ministry of Economy and Executive Office of Anti-Money Laundering and counter Terrorism Financing, for investors and employees in Hamriyah Free Zone Authority and Sharjah Airport International Free Zone Authority.

Beneficial Owner Procedure Regulation Guide

Step by Step Guide in filling out the UBO Declaration Form for Individual Owner/s

Step by Step Guide in filling out the UBO Declaration Form for Corporate Owner/s