In order to run a business in the UAE, business owners need to know about the frequent changes to Emirati Laws. Even if they don’t have time to get involved directly, they need to know what’s going on to make sure compliance. Companies have to keep up with these changes in order to stay on the right side of the law. This means that they have to take more legal steps. In this piece, we’ll look at a new Cabinet Decision about Procedures for Real Beneficiaries.
Regulation of Procedures for Real Beneficiaries
As per Cabinet Decision No. 58 of this year, there are some changes with regards to the Regulation of Procedures for Real Beneficiaries. This new rule makes it compulsory for all Mainland companies to maintain details regarding a Beneficiary Ownership Register, or BOR. This law will also hold good for all companies incorporated in non-financial Free Zones. Such companies must submit the relevant details and documents to its concerned Relevant Authority on time to maintain compliance.
Who is a real beneficiary?
A true beneficiary is any individual who possesses ownership or exercises control over the institution, either directly or indirectly. In addition, the organisation conducts transactions on behalf of the individual. The term ‘effective control’ refers to the right to vote and a minimal shareholding capacity of 25 percent. It could also refer to an equal contribution to the company’s capital and the right to manage, appoint, and remove the company’s executives.
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Further Requirements
The directive states that companies must obtain and maintain up-to-date information regarding their Real Beneficiary. The information collected should include the following;
- Name of the Real Beneficiary
- Nationality
- Place of birth
- Legal documents including Passports, Emirates ID card
- The basis for becoming the Real Beneficiary
- Date of expiration of the said role
In case no individual exercises such control over the institution, the company can register someone to hold such a post. Usually, companies will manage or appoint people in senior management roles to such a position. However, if the company enjoys disclosure benefits, they do not have to publicize their records.
According to the new directive, all existing businesses have sixty days to create and submit a BOR. Effectively, companies had from August 27, 2020 to October 27, 2020 to submit the BOR to relevant Regulatory Authorities. All changes and modifications to the document must be made within fifteen days of becoming aware that a change is necessary. The law also requires companies to notify members of nominal management. In addition, the Regulatory Authorities can share BOR-related information with other foreign authorities. Failure to maintain the BOR may also result in the authority imposing a variety of administrative sanctions.
