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The UBO Law in Dubai: Your Path to Transparency

Welcome to Dubai’s new era of business transparency! To achieve this, the UAE government introduced robust regulations to disclose the Ultimate Beneficial Owner (UBO). In this blog, we will delve into the key aspects of these regulations, their legal implications, and what businesses in Dubai need to know to ensure compliance.

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I. Understanding the UBO Law in the UAE

The UBO Law, formally known as Cabinet Decision No. 58 of 2020, marks a significant step towards transparency in the UAE’s corporate landscape. It requires companies to maintain detailed registers containing information about their UBOs, shareholders, and nominee board members. Let’s break down the essential aspects of this law:

A. Who Does it Apply to?

The UBO Law applies to all companies licensed and registered in the UAE, except those wholly owned by a government entity or established in specific financial-free zones. This wide application underscores the government’s commitment to transparency across various sectors.

B. What Must be Disclosed?

1. UBO Register:

This register must contain information about the “Real Beneficiaries” of the company. These are individuals who directly or indirectly own or control at least 25% of the company’s share capital, and voting rights, or have control through other means. Additionally, the register must include:

   – Full name, nationality, date, and place of birth.

   – Place of residence or notice address.

   – Passport or identification number, country, date of issue, and expiry.

   – The basis for identifying the person as a beneficiary.

   – Dates of becoming or ceasing to be a Real Beneficiary.

2. Shareholder/Partner Register: This register must include:

   – Number and class of shares/equity held, along with voting rights.

   – Date of acquiring shares/equity.

   – Detailed information for shareholders/partners who are natural persons, and for legal entities, including their names, legal form, and more.

C. Reporting Deadline

Companies subject to the UBO Law must file the registers with their relevant licensing authority by a specific deadline. Compliance is crucial, as failure to do so can lead to legal repercussions.

II. Practical Implications for Businesses in Dubai

The UBO Law’s requirements are mandatory for all companies in the UAE, except those with exemptions. Businesses in Dubai need to be proactive in their compliance efforts with the assistance of law consultants in Dubai. Here’s what you should consider:

A. Compliance is Non-Negotiable

For most companies, compiling and filing the UBO and Shareholder/Partner Registers should be a manageable task. However, it’s essential to review and understand your ownership and control structures carefully. Internal agreements among shareholders/partners could impact UBO identification, so legal advice in Dubai may be needed.

B. The Role of Licensing Authorities

Companies must interact with the appropriate licensing authorities for the registration of corporate entities. This process is time-sensitive, with a deadline in place. Any amendments or changes in the register must be promptly reported to avoid legal complications.

III. Economic Substance Regulations (ESR Law)

Alongside UBO disclosure, the UAE has also implemented Economic Substance Regulations (ESR Law) to ensure that companies conducting specific activities demonstrate sufficient economic substance within the UAE. Here are the key points:

A. Applicability

The ESR Law applies to corporate entities and unincorporated partnerships in the UAE. Unlike the previous law, it no longer exempts entities solely based on majority government ownership.

B. Relevant Activities

The ESR Law primarily targets income from specific activities, including banking, insurance, investment fund management, lease finance, and more. Businesses engaged in these activities must demonstrate economic substance.

C. Notification and Reporting Deadlines

All Licensees must file notifications to disclose if they undertake Relevant Activities and earn income from them. Notifications are submitted to the Ministry of Finance’s portal, and it’s essential to meet specific deadlines for notification and reporting.
In conclusion, the UAE’s commitment to transparency and regulatory compliance is evident through the UBO and ESR Laws. For setting up businesses in Dubai, understanding these regulations and their legal implications is vital. Reach out to Dubai law firms for compliance with the new regulations and laws. They can provide you with consultations tailored to your specific needs.