Ministry of Economy UAE Presents Revised Regulations to Identify Beneficial Ownership

The Ministry of Economy conducted a press briefing, unveiling an overview of decree details aimed at identifying true company owners and preventing ownership concealment using complex structures.

The new decree significantly complements previous legislation (including Resolution No. 58 of 2020), ensuring the collection and registration of actual beneficiary data for all private enterprises, including those in free zones. Approximately 700,000 companies operate across various sectors in the UAE.

As per the decree, a real beneficial owner of a legal entity is recognized as someone who ultimately owns or controls, directly or indirectly, or through a chain of ownership or control, or by other means of control (having the right to appoint or dismiss the majority of directors) 25% or more of the shares or voting rights in a legal entity.

Additionally, a five-step test was introduced to determine the actual beneficial owner of a company:

1. Evaluating the Registrar’s risk-based approach, especially in complex ownership structures;
2. Tracing the real beneficial owner through any number of legal entities or structures of any kind;
3. If multiple individuals jointly own or control a share in a legal entity, all are considered co-owners or controllers of that share;
4. If no individual is identified as the ultimate beneficial owner even after considering all reasonable measures or if there is reasonable doubt that any identified individual is the actual beneficial owner, then the entity controlling the legal entity through other means of control is considered the real beneficial owner;
5. If the above criteria don’t apply, an individual serving as a senior managing official is considered the ultimate beneficial owner.

Nominee board members must disclose their status and provide necessary information to companies within 15 days of assuming office, as per Article 10. A nominee board member who gained such authority before the decree’s publication must inform the legal entity within 30 days of the publication date. Other notification grounds exist (for data changes and termination of duties).

Special attention is given to a risk management approach for enterprises to prevent money laundering and terrorist financing (AML/CFT). A dedicated AML/CFT unit will be established in the Registrar’s office to ensure compliance and report to the Ministry.

Administrative sanctions (totaling 16 categories) include warnings and financial penalties for violations, including fines for primary and secondary breaches, with the Registrar having the discretion to suspend a license for one month or more.

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