Objective of Cabinet Resolution No. 58 of 2020 | Push Digits Chartered Accountants

Objective of Cabinet Resolution No. 58 of 2020

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The government’s decision to revise resolution 34 (which came out in the same year) with cabinet resolution No.58 may have left many business owners in the UAE feeling confused. The revised resolution has made it compulsory for all UAE registered businesses to identify and declare their Ultimate Beneficiary Owners (UBOs). Also, companies must maintain updated records of their UBOs data, nominee board directors, and partners/shareholders as well. All the UAE companies (except the Entities owned by the Government and legal Entities licensed in free zones e.g. DIFC) will have to comply with this law to avoid penalties and/or sanctions.

Who is an Ultimate Beneficiary Owner?

Every company has a chain of ownership that dictates its hierarchy and identifies people who have ultimate ownership and control over an entity. Any person or a company that controls or owns more than 25% of a company’s shares is known as the Ultimate Beneficiary Owner.

Objectives of the Resolution

By requiring companies to disclose information about their Ultimate Beneficial Owners, the resolution aims to create a business environment that is more transparent. Companies can engage with various entities while knowing who they are actually dealing with. Also, this will help bring the UAE’s UBO regulations on par with the rest of the world.

The authorities will also be able to collect better data about the various entities operating in the UAE. The Emirates attracts businessmen and investors from all over the world. It is important for the authorities to know who is setting up the business in the country and for what purpose. Having a clear picture of all the players in the region will help mitigate financial malintent and also make sure that terror financing (which is becoming commonplace in the world) is discouraged.

By knowing who is behind closed corporate doors, the authorities hope to dissuade companies from getting involved in activities that are harmful to the region’s economy and safety. In doing so, the resolution will help establish a more sustainable business environment. 

The end goal of the resolution is to increase the sustainability of the UAE’s thriving business zones. Entities that have nothing to hide shouldn’t think of the resolution’s requirements as a hindrance at all. There are plenty of third-party agencies in the UAE that can help companies declare their UBOs and comply with the resolution. Also, the resolution does not overlook confidentiality; data required by the resolution will be kept secure by the authorities. 

 

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