The Dubai Development Authority (DDA), formerly the Dubai Creative Clusters Authority, has issued a new circular* on requirements relating to disclosure of Ultimate Beneficial Ownership (UBO) in the DDA Free Zone. This briefing looks at the changes affecting companies operating in the DDA.
The new circular (the Circular) supplements United Arab Emirates (UAE) Federal Law No 20 of 2018 on Anti Money Laundering and Countering the Financing of Terrorism (AML Law) and Cabinet Decision No 10 of 2019 issued pursuant to the AML Law, which came into force last year.
Definition of UBO
The Circular defines a "UBO" as an individual, who owns or controls 25% or more of a "Business Partner" in the DDA Free Zone, either directly or indirectly.
A "Business Partner" is any free zone company (FZ-LLC) incorporated, or a branch office (Branch) registered, in the DDA Free Zone.
When to disclose?
From 1 July 2019 (the Effective Date), all new Business Partners, will be required to submit a UBO form in the template issued by the DDA (UBO Form) as part of the registration and licensing process for new Business Partners.
In addition, all existing Business Partners will be required to complete and submit the UBO Form as part of their licence renewal at their next renewal date after the Effective Date.
What to disclose?
The UBO Form requires disclosure of the following details in respect of each UBO of a Business Partner:
- full name;
- date of birth;
- passport number; and
- residential address.
The DDA may require additional documents and other verifiable information to evidence disclosures made in the UBO Form.
Exempted Business Partners
The following Business Partners are exempt from making a UBO declaration:
- a subsidiary or a branch of a company listed on a stock exchange;
- a subsidiary or a branch of a government or a government owned entity; and
- a subsidiary or a branch of an entity registered and licensed in the UAE.
Continuous duty of disclosure and penalties
A Business Partner must provide UBO information to the DDA and update that UBO information as and when the UBO changes.
Failure to comply with the requirements may result in the suspension or termination of the Business Partner's licence.
Whereas the previous UBO requirements simply required a Business Partner to maintain UBO details at its premises, the new requirements state that the UBO Form must be submitted in order to complete the registration process or renew an existing registration.
This is a more systematic approach, aimed at ensuring that the DDA is kept informed in respect of the UBOs of its Business Partners. These changes are in line with international efforts to bring greater transparency to the beneficial ownership of global corporations, in order to fight money laundering and terrorist financing.
If you would like to find out more about these new requirements and what you should consider, please contact the authors of this briefing.
*Circular No 323