Cabinet Decision No. 58 of 2020 on Beneficial Ownership

Introductions

To strengthen transparency and combat financial crime, the UAE Cabinet issued Decision No. 58 of 2020 on the Regulation of Beneficial Owner Procedures. This decision is part of the country’s wider efforts to align with Financial Action Task Force (FATF) recommendations and enhance its Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) framework.

Cabinet Decision No. 58 of 2020 makes it mandatory for companies registered in the UAE to disclose their Ultimate Beneficial Owners (UBOs), ensuring that ownership structures are transparent and not used to disguise illicit activities.

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What Is a Beneficial Owner?

A Beneficial Owner (BO) is the natural person who ultimately:

• Owns or controls a company (directly or indirectly), or

• Benefits from transactions conducted through the company.

UBO rules prevent criminals from hiding behind complex corporate structures, trusts, or nominee arrangements.

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Key Provisions of Cabinet Decision No. 58 of 2020

1. Applicability

• Applies to all companies licensed and registered in the UAE, including mainland and free zones, except:

o Companies in financial free zones (DIFC and ADGM) that have their own regulations.

o Companies wholly owned by the UAE federal or local government.

2. Registers to Be Maintained

Every company must maintain and submit the following registers:

• UBO Register – Identifying all natural persons who ultimately own or control the company.

• Nominee Director Register – Listing directors or managers acting on behalf of others.

• Shareholder Register – Containing details of all shareholders and their ownership stakes.

3. Definition of UBO

A UBO is a person who:

• Owns or controls at least 25% of shares or voting rights, directly or indirectly, or

• Has the right to appoint or dismiss the majority of directors, or

• Exercises ultimate control over the company by other means.

4. Submission Requirements

• Companies must file UBO information with their relevant licensing authority (Department of Economic Development or Free Zone Authority).

• Information must be accurate, up-to-date, and submitted within specified timelines.

5. Ongoing Obligations

• Any changes in beneficial ownership must be updated within 15 days.

• Records must be maintained for at least five years after a company is dissolved.

6. Confidentiality

• UBO data is kept confidential and accessed only by regulatory and judicial authorities.

• Companies are prohibited from disclosing this information to unauthorized parties.

7. Penalties for Non-Compliance

• Administrative fines for failure to comply.

• Potential restrictions on company operations until compliance is achieved.

• Reputational damage due to regulatory action.

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Why This Law Matters

1. Enhances Transparency

Ensures clarity in ownership structures, reducing the risk of shell companies and front organizations.

2. Strengthens AML/CTF Efforts

Helps regulators trace the real individuals behind suspicious transactions, aiding AML enforcement.

3. Aligns with Global Standards

Positions the UAE as a trusted and transparent jurisdiction for global investors.

4. Protects Business Reputation

Compliance builds investor confidence and shields businesses from being linked to illicit activities.

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Best Practices for Businesses

1. Identify and verify all UBOs in line with the 25% ownership/control rule.

2. Maintain updated UBO, shareholder, and nominee registers.

3. File accurate information with licensing authorities on time.

4. Implement an internal compliance process for monitoring ownership changes.

5. Train compliance officers and staff to handle UBO-related reporting.

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Conclusion

Cabinet Decision No. 58 of 2020 is a milestone in strengthening corporate transparency in the UAE. By mandating UBO disclosure, the government ensures that companies cannot be misused for money laundering, terrorism financing, or other illicit activities.

For businesses, compliance is not just a legal requirement but also a strategic advantage that enhances credibility with regulators, investors, and global partners.

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About Sheikh Anwar Accounting and Auditing LLC

At Sheikh Anwar Accounting and Auditing LLC, we assist businesses in complying with Cabinet Decision No. 58 of 2020 and broader AML/CTF regulations. Our services include:

• UBO identification and register preparation.

• Filing UBO information with licensing authorities.

• AML policy drafting and compliance frameworks.

• Outsourced MLRO and compliance officer services.

• Staff training on AML and UBO compliance.

• 📍 Head Office: Dubai, UAE

• 🌐 Website: www.sa-auditors.com

• 📧 Email: info@sa-auditors.com

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