UAE Updates Economic Substance Regulations
22 September 2020
UAE regulation of procedures related to real beneficiaries
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Legal Development 06 October 2020 06 October 2020
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Middle East
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Corporate
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”).
Key takeaways
- 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 27 October 2020.
- There is a requirement for information from these registers to be submitted to competent licensing authorities.
- There are certain exceptions to the requirements of the new legislation which apply to various companies, including those which are ultimately listed on a regulated public exchange.
The New Cabinet Decision applies to all companies licensed in the UAE, other than:
- Companies in financial free zones (Abu Dhabi Global Markets and Dubai International Financial Centre).
- Companies which are directly or indirectly wholly owned by federal or Emirate government.
Companies licensed in the UAE which are ultimately listed on a market that provides for robust transparency rules on Real Beneficial Owners are exempt from certain of the requirements in the New Cabinet Decision.
The New Cabinet Decision mandates that companies licensed to carry on business in the UAE 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 controls the licensee, whether directly or indirectly, through at least 25% of the capital.
Licensees in the UAE are required to have created a Register of Partners (or Shareholders) and a Register of Real Beneficial Owners by 27 October 2020. The New Cabinet Resolution also requires that each licensee submits the information from its Register of Partners (or Shareholders) and Register of Real Beneficial Owners to its competent licensing authority by 27 October 2020, although at the time of writing it is not clear whether that will be possible to do in practice. The competent licensing authorities are under an obligation to maintain the confidentiality of information submitted to them under the New Cabinet Decision.
Companies licensed in the UAE which are ultimately listed on a market that provides for robust transparency rules on Real Beneficial Owners are exempt from certain of the requirements in the New Cabinet Decision.
The New Cabinet Decision reflects a continued drive towards more transparency and cooperation both within the UAE and internationally by introducing provisions allowing for the exchange of information on Real Beneficial Owners.
Clyde & Co's Corporate Group can provide further advice on these developments, and our Company Secretarial team can assist in maintaining and filing statutory registers. Please email Ben Smith or your usual Clyde & Co contacts for more information.
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