The Bahraini Ministry of Industry, Commerce and Tourism (MOICT) has recently issued Ministerial Order No. 83 of 2020 regarding the Standards, Controls and Rules of Disclosing the Ultimate Beneficial Owner (UBO) which came into force on 30 July 2020 (UBO Order).
The UBO Order is a step taken by the Kingdom of Bahrain in addition to existing efforts aimed towards combatting money laundering, terrorism financing and other serious crimes such as tax evasion, making it a requirement upon Bahraini registered companies to disclose the identity of their UBO.
With the exception of Bahraini companies licensed to undertake business activities by the Central Bank of Bahrain, all Bahraini incorporated companies (including branches of foreign companies) that are subject to provisions of Legislative Decree No. 27 of 2015 with respect to the Commercial Register (Registered Persons) are now required to disclose to the MOICT the details of any UBO. Registered Persons have a continuing obligation to update such information should there be any change of their UBOs or any relevant information relating thereto.
Identifying your UBO
Article 3 of the UBO Order defines a UBO as any natural person who satisfies all or some of the following conditions:
- A person owning or controlling, directly or indirectly, at least ten percent (10%) of the capital or voting rights of the Registered Person;
- Where the Registered Person is a company owned by another company, then the UBO is the natural person who is the ultimate owner in the chain of ownership or the person who has effective control thereon;
- A person who has the ability to take or influence decisions of the Registered Person whether directly or indirectly through personal connections, financial support, family relations or any other agreement, arrangement or understanding;
- A person making financial contributions towards financing the business of the Registered Person or its assets or benefiting indirectly from business transactions made in its favour;
- A person who has direct or indirect control over the operations of the Registered Person through a management agreement, power of attorney or any similar instrument;
- A person who has ultimate effective control through a chain of ownership or other means of control other than direct control of a Registered Person;
- A person who exercises control through management positions within the Registered Person in a manner that affects the strategic decisions or influences the general direction of the Registered Person; or
- A person that satisfies any other conditions, criteria, and rules determined from time to time by the Minister of MOICT.
Article 4 of the UBO Order details the information and documents to be furnished by Registered Persons to the MOICT with respect to each UBO as follows:
- UBO's full name
- Copy of the UBO's passport
- Copy of the UBO's identification card
- Country of tax residence
- Tax identification number
- Contact details
The MOICT reserves the right to request any additional information and documents as it deems necessary fit, and may withhold registration of any new entity on the commercial register if the same has not been furnished to it.
Timeline for Disclosing UBO
Registered Persons with existing commercial registrations are advised to submit details of their UBOs without undue delay to the MOICT. Such submission must be made through the Business Licensing System (Sijilat).
Penalties for Non-Compliance
- A Registered Person's failure to provide the MOICT with required information and documents of the UBO or the provision of false or incorrect information or documents in this regard, will result in the following penalties being imposed by the MOICT:
- Suspension of the commercial registration of a Registered Person for a period not exceeding six months.
- Imposition of an administrative fine not exceeding BD1,000 per day for a first offence and BD2,000 per day for any offence committed within three years from the date of the previous notice of non-compliance issued by the MOICT.
- Strike the Registered Person from the commercial register. The total fines which may be imposed by the MOICT shall not exceed BD100,000.
How can we assist you?
Our team can assist you with:
- Establishing the UBOs for any Registered Person.
- Complying with the provisions of the UBO Order including filing the relevant UBO information with the MOICT.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.