Ultimate Beneficial Ownership Regulation in the DIFC
The DIFC has recently introduced their regulations concerning The Ultimate Beneficial Owners (UBO) of companies. A beneficial owner is an individual within a company who, as defined within the new DIFC regulation, directly or indirectly holds or controls:
Shares or other Ownership Interests in the Relevant Person over the Relevant Percentage;
Voting rights in the Relevant Person more than the Relevant Percentage; or
The right to appoint or remove a large number of Directors of the Relevant Person.
Concerning a partnership, the UBO is one who can exercise significant control overall.
Finally, in the case of a Non-profit organization or foundation, the UBO is an individual who has legal control over the activities of the Governing Body of the entity or the operations performed by it.
Contents of the Law
The general premise of the Ultimate Beneficial Ownership Regulation (Consultation Paper Number 7 of 2018) is to make clear that the UBO of an entity is to be identified. They should be a formalized requirement within the previously mentioned legal forms of business. On top of this, the regulation also clarifies that the DIFC is responsible for ensuring they are aware of the UBOs and should maintain up to date information on them.
There are certain exemptions here though, which Article 2 covers. Article 3 defines who is to be considered a UBO as per this law, which this update has previously already mentioned. It goes into further depths and looks at other circumstances such as 3.1.2 which concerns cases of two or more UBO parties.
There is also a registrar that holds all of the information collected on the UBOs within the DIFC, and it is up to the relevant person to obtain this information and relay it to the registrar, as stated in Article 3.2.2.
Article 4.1.4 mentions the specific data that requires collecting on the UBOs; this includes their names, addresses, nationality, and date of birth and more. Article 4.2 states that if a new UBO is to arise or replace the prior one, an application to the court must be made. On top of this, if any issues arise with concerns to the current UBO, an application should also be made to the court to resolve the matter.
Article 5 related to a company’s Nominee Director. This person within a company should also be registered, and the information that requires collecting is the same as the UBO and Article 5.2.1 confirms this.
The duties of the registrar are clarified under Article 7 and include collecting and analyzing the data, though this should only be to regulate in areas such as money laundering and terrorist financing, criminal organizations and sanctions compliance in the DIFC, and to comply with any other applicable laws in the DIFC.
Finally, Article 8 mentions that any individuals tasked with obtaining the information on either the UBO or the Nominee Director, who fails to follow these regulations, will be struck off the registrar.