In line with international efforts to bring greater transparency to the beneficial ownership of global corporations, in order to fight money laundering and terrorist financing, the Dubai International Financial Centre's ("DIFC") new Ultimate Beneficial Ownership Regulations recently came into force. The deadline for compliance with the new DIFC UBO Regulations is 10 February 2019, with a fine of US$25,000 imposed for each Registered Person that fails to meet the listing requirements.
What is Required?
Under the Regulations, enacted on 12 November 2018, each DIFC Registered Person is required to keep a Beneficial Ownership Register, compiled of information of each of its Ultimate Beneficial Owners ("UBO"). In addition, a Registered Person, which has one or more Nominee Directors is obligated to keep and maintain a Register of Nominee Directors.
The following information is required to be entered into the Beneficial Ownership Register by Registered Persons in respect of each UBO: Full name, residential address and address for service of notices (if different), as well as their date and place of birth, nationality and details of passport or government issued ID.
For the Register of Nominee Directors, the same level of information is required, in relation to the person on whose behalf each Nominee Director acts.
Who is Affected?
Essentially all corporate entities in the DIFC are considered Registered Persons and the regulations define a UBO of a Registered Person as a natural person, other than one acting solely as a professional advisor or manager, who owns or controls in regard to a company:
- Shares or ownership interests in the Registered Person of at least 25%
- Voting rights in the Registered Person of at least 25%, or
- The right to appoint or remove the majority of the directors of the Registered Person
If there is no natural person identified as a UBO of a Registered Person, then any that is required or accustomed to act on the instructions of the Registered Person or its Governing Body, shall be a UBO.
If there is no UBO of a Registered Person, each natural person that is a member of its Governing Body and UBO of a body corporate member of the Governing Body, will be deemed to a UBO of the Registered Person.
Who is Exempt?
The Regulations do not apply to a Registered Person which has its securities listed or traded on a recognised exchange, or is regulated by a recognised financial services regulator. Companies, foundations or partnerships, which can satisfy the Registrar that they are subject to equivalent international standards that ensure adequate transparency of ownership information in their home jurisdictions, are also exempt from the Regulations.
Further exemptions apply to non profit organisations which do not primarily engage in raising or disbursing funds for charitable, religious, cultural, educational, social, fraternal or similar purposes, in addition to entities wholly owned by a government or government agency of a relevant jurisdiction or established under UAE law to perform government functions.
What Needs to be Done Now?
The impending deadline of 10 February 2019, to provide names and required particulars to the Registrar, of persons included in the Beneficial Ownership Register and Nominee Directors included in the Register of Nominee Directors, means that all clients with corporate interests in the DIFC should determine if they are in scope of the new UBO Regulations and be in position to make the relevant filings.
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.