Ultimate Beneficial Owner-

Ultimate Beneficial Owner – Is the one-time compliance enough?

Identifying and declaring the Beneficial Owner (“BO”) was one of the hot topics of 2021, specially with a one-time compliance statutory deadline towards end of June 2021. However, the important question is whether a one-time compliance is enough or should one be aware of other compliances surrounding declaration of BO and its regulations?

Brief Background:

The BO Regulations1 introduced a new framework and requirements for entities to disclose its BO. The main purpose was enhancing transparency in ownership of entities registered in the UAE, developing effective regulatory mechanisms and procedures in respect of BO data, and to curb practices such as financial fraud, money laundering, financing terrorism and evading of taxes.

Applicability:

BO Regulations applies to all entities licensed in the UAE except entities in financial free zones (ADGM & DIFC) and the entities which are directly or indirectly wholly owned by Federal or Emirate government.

Identification of BO:

The natural person who ultimately owns or controls the Legal Person, whether directly or through a chain of ownership or any-other indirect means. And the natural person on whose behalf the transactions are being conducted or who exercises ultimate control over a legal person is a BO.

Key compliances in brief under BO Regulations:

Inevitably, apart from the one-time compliance, there are other on-going compliances connected with declaration of BO that are required to taken into consideration. Every Legal Person is responsible to comply with the following requirements:

• To keep, maintain and update Register of BO.
• To keep, maintain and update Register of Partners or Shareholders (including data of Partner or Shareholder acting as Trustor or Nominee Board Member and person represented by any Trustee or Nominee Board Member).
• To furnish to the Registrar.
• Information/details/data contained in the Register of BO and Register of Partners or Shareholders.
• Data regarding shares and identity of any person or board member to whom shares are issued.
• To inform Registrar upon any change in data/information required to be kept under BO Regulations.

Penalties:

Upon any non-compliance or violations, there are penal consequences ranging from a written warning to hefty monetary penalties to restriction on the powers of the board to suspension of trade license.

Considering the strict enforcement of the BO Regulations and the connected penalty implications on non-compliance or violations, it is crucial that entities exercise due care and diligence in meeting the requirements of the BO regulations.