As published on pinsentmasons.com/out-law, Wednesday 30 September, 2020.
The United Arab Emirates (UAE) has introduced new rules that require companies based in the UAE mainland and commercial free zones to keep registers of their beneficial owners and shareholders.
Companies which come under the remit of the regulation have until 27 October 2020 to set up a register of their ‘real beneficiaries’ as well as shareholders.
Corporate law expert Christopher Neal of Pinsent Masons, the law firm behind Out-Law, said: “Following the introduction of the UAE’s economic substance regulations, this is another welcome development by the UAE authorities aimed at combating tax avoidance and criminal activity and providing greater transparency to the UAE’s business environment.
“It will be interesting to see whether the relevant authorities will use this as a stepping-stone towards ultimately maintaining a publicly available companies register, similar to Companies House in the UK and those other European jurisdictions,” Neal said.
The concept of a real beneficiary was introduced in the Ministry of Economy Cabinet Resolution No. 58 of 2020. It defines a real beneficiary as a physical person who owns or controls at least 25% 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 the above, the real beneficiary is the senior manager of the company.
In addition to the registers of beneficiaries and shareholders, companies will also have to keep a register of nominee directors acting in accordance with the guidelines or instructions issued by another person.
The information contained within companies’ registers will be kept confidential by the Ministry of Economy and registrar.
Administrative sanctions for failure to comply with the rules are likely to be issued, but details of these are yet to be released.
The regulation does not apply to companies established in the UAE’s financial free zones, or to companies wholly owned by the federal or local government.