New regulations bring the concept of beneficial ownership into the UAE, part the jurisdiction's programme to crack down on forms of illicit transactions.
The United Arab Emirates recently announced the formal launch of new disclosure requirements for corporate entities in the jurisdiction and a new beneficial ownership register. The move is a sign of growing pressure on financial centres to become more transparent. Beneficial ownership information must be filed with relevant authorities by 23 October.
The new rules took effect on 28 August. One consequence is that all UAE-registered companies must keep a shareholders’ register, a beneficial owners’ register and a nominee directors’ register. The BO and nominee directors’ registers are new concepts but that of a shareholders’ register is not.
As described by consultancy firm Re/think, the obligations are “all-encompassing”, applying to all legal persons registered in the UAE (aside from governmental owned entities). The new regime covers UAE mainland entities and entities – whether “free zone” or “offshore” – in all non-financial free zones. (The Abu Dhabi Global Market and the Dubai International Financial Centre have their own, similar regulations already in place.)
“There is no doubt that the UAE is taking anti-money laundering/counter-terrorism finance very seriously. Substantial resources have been put towards the topic which is at the top of the policy agenda. In a short time, the country has taken significant steps in strengthening its framework,” Re/think said in a note.
Outside the DIFC and ADGM, two global financial centres, there has been a need to put a mass of compliance rules on a common footing; there are 39 different company registries between non-financial free zones and the UAE mainland.
“Following the introduction of the UAE’s economic substance regulations, this is another welcome development by the UAE authorities aimed at combatting tax avoidance and criminal activity and providing greater transparency to the UAE’s business environment,” corporate law expert Christopher Neal of Pinsent Masons, said. “It will be interesting to see whether the relevant authorities will use this as a stepping-stone towards ultimately maintaining a publicly available company register, similar to Companies House in the UK and those other European jurisdictions.”
The concept of a real beneficiary in the UAE defines the term as a physical person who owns or controls at least 25 per cent of a company’s shares. Companies can have several real beneficiaries. If no such person is identified, then the real beneficiary is a physical person who exercises control over the company and, in the absence of any of those conditiions, the real beneficiary is the senior manager of the company.
Lawyers say administrative sanctions for failure to comply with the rules are likely to be issued, but details of these are yet to be released.