This article has been researched and written by Anam Sattar and the team at Creation Business Consultants. AI has not been used in generating this article.
The UAE has updated its regulations concerning Real Beneficiary Ownership requirements and the penalties linked to them. This update came with the introduction of Cabinet Decision No. 109/2023 on November 16, 2023, which replaces Cabinet Decision No. 58 of 2020, referred to as “the New Decision”.
Like the prior regulation, the New Cabinet Decision defines the Real Beneficial Owner of a legal entity as a natural person who directly or indirectly owns or controls at least 25% or more of the capital in the entity.
If there are no individuals meeting the above criteria or if there is uncertainty, the natural person who exercises control over the entity through other means will be considered the Real Beneficial Owner.
In cases where all possibilities have been explored and no individual with ultimate control has been identified, the natural person holding the position of Senior Management Officer will be presumed to be the Real Beneficial Owner.
Although the New Resolution does not specify the exact monetary values or types of administrative sanctions that can be imposed, it refers to an external “Administrative Sanctions Regulation”. These sanctions are outlined in Cabinet Resolution No. (53) of 2021, concerning the Administrative Penalties against Violators of The Provisions of the Cabinet Resolution No. (58) of 2020.
The penalties for non-compliance can include fines, suspension, or restriction of the trade license, and limitations on the powers of board members or directors of the legal entity.
The fines imposed vary depending on the type and frequency of the violation. They can range from AED 1,000 to AED 100,000.
These penalties serve as deterrents and emphasize the importance of compliance with the regulations regarding the establishment and maintenance of the Register of Beneficial Owners. It is crucial for legal entities to adhere to these requirements to avoid facing significant financial penalties and operational disruptions.
In case of a violation of the provisions outlined in the new Cabinet Decision, the Registrar has the authority to impose one or more penalties listed in this decision. These penalties range from a Written Warning Notice, requiring the legal entity to rectify their situation within 30 days of receiving the notice, to fines of up to AED 100,000.
Individuals affected by these administrative penalties have the right to file a grievance with the Registrar to the Grievances Committee within 30 days from the date of notification. They may also submit a request to halt the implementation of administrative penalties. The Committee will decide on this request within 45 working days in accordance with established procedures.
We advise assessing the practices adopted by your UAE company to minimize the risk of violating UAE Companies Law and the New Resolution, as such violations can lead to fines imposed by the authorities.
If your corporate structure is complex, we recommend seeking advice to ensure compliance with the relevant regulations.
We would be pleased to conduct a “Free Business Health Check” review of your company to evaluate its compliance with UAE laws. Get in touch with our consultants today.
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This Article was researched and written on Mar 19th, 2024 by Anam Sattar.
This Article was reviewed and updated on Sep 16th, 2024 by Thomas McNelliey.
