On 28th August 2020, the UAE Ministry of Economy published Cabinet Resolution No. 58 of 2020 (the ‘Decision’) on the “Regulation of Procedures Related to Real Beneficiaries”. The Decision requires companies based in the UAE mainland and commercial free zones to maintain registers of their beneficial owners and shareholders. Further, the decisions require that the companies file their registers with the relevant registrar and licensing authorities.
One of the main drivers to introduction of these rules is Federal Decree Law No. 20 of 2018 and its implementing regulation, Cabinet Decision No. 10 of 2019, which deals with anti-money laundering crimes and combating the financing of terrorism and financing of unlawful organizations. The information maintained in the register could be shared by the Ministry of Economy with foreign governments at their request, as per international cooperation measures.
Similar beneficial ownership disclosure rules have been introduced in jurisdictions such as Jersey, the British Virgin Islands and the Cayman Islands. This development is a further step by the UAE to align internationally with the OECD’s transparency and BEPS initiatives, and builds on the work done to implement economic substance regulations. Beneficial ownership information may also be required to be reported under the UAE economic substance regulations.
The key highlights of this decision are as follows:
Administrative sanctions for failure to comply with the rules are likely to be issued, but full details of these are yet to be released. The decision also mentions that the information contained within companies’ registers should be kept confidential by the Ministry of Economy and the Registrar.
Although the deadlines are fast approaching, there remains a lack of clarity or guidance in terms of the format and channel for submitting these registers.