UAE Companies to Disclose Ultimate Beneficial Owner (UBO)

Aimed to combat corruption, business fraud, and other financial crimes, global regulatory trends tend to focus on corporate transparency. For this reason, businesses operating internationally are now being required to disclose accurate beneficial ownership information.

What is UBO?

An Ultimate Beneficial Owner or simply a beneficial owner refers to an individual or organization that has significant influence or control over a business and/or benefits from their relationship/association with the company. The conditions to be considered a UBO may differ in every country. For example, an Ultimate Beneficial Owner Dubai may also refer an individual who owns/controls 25% of the capital or has voting rights for at least 25% of the shares.

The deadline for DED UBO filing was on 15 June 2021. New companies and businesses incorporated the resolution come into effect are required to report to the Registrar within 60 days (upon formation) for the registration. Once at the Real Beneficiary Register, the business owner or their representative must provide the information listed below when submitting their ultimate beneficial owner UAE form:

• Name

• Nationality

• Date and place of birth

• Place of residence (the address where notifications must be sent)

• Passport

• Id Number (with the country and date of issue)

• Basis/date for becoming a real beneficiary

• The date on which the individual ceases to be a real beneficiary

• Additionally, the Partners or Shareholders Register must include the listed information for each partner or shareholder:

• The number and class of shares/equity held voting rights must also be attached

• Date when the shareholder or partner acquired the equity/shares

• Names of the individuals holding senior management positions (including their passport or ID number, country of issue, and expiration date)

If the shareholders/partners are recognized as a legal entity, submitted information must include the following:

• Name

• Legal form

• Memorandum/articles association

• Address of the main office or headquarters

• For foreign legal entities, the name and address of the legal representative in the UAE

If you need an attorney in Dubai who can help you with processing the necessary documents for your business or you need legal advice in handling challenges in setting up your business, Motei & Associates offers a range of legal services that can be tailor-fitted to meet the requirements of your business.

How to File a Rent Dispute Case in Dubai

Conflicts between tenants and landlords are very common. No matter how smooth the relationship is, there will be times when both parties can’t agree on certain matters. Whether it’s making certain changes on the property or updating the terms on the contract, it may lead to one party filing tenancy complaints against the other if they can’t find a compromise to settle the issue at hand.

When should you file a case?

Filing a rent dispute case may cost time and money for the parties involved. Hence, it should only be used as a last resort. Once all means of communication or negotiation have been exhausted, you may lodge an official complaint with the Rent Disputes Settlement Centre located at Dubai Land Department’s head office in Deira.

To file a case, you will need to submit the documents listed below. It is also crucial that you make sure that you have the original copies of these documents.

• A copy of the tenant’s passport

• A copy of the landlord’s passport

• Emirates ID

• Ejari certificate

• Original blue tenancy contract

• Most recent DEWA bills

• Rental deposit slip

• Copies of cheques for rental payment

• Other types of documents to support your case

• If the dispute involves commercial property, you will need to present trade licenses and other documents to prove that the business is legitimate and has all the required documents.

What happens after the complaint has been filed?

Established to smoothly resolve rent disputes, the committee is responsible for looking into all cases of rental disputes in Dubai. However, their duty does not involve cases involving rental disputes for properties located in the free zones, as well as financial disputes such as financial lease contracts. According to recently available data, the most common complaint received by the committee is complaints due to unfair rental increases.

The Arbitration Department is the first department of the four departments in the legal process for handling and resolving property disputes in Dubai. Once a complaint has been filed, the department will work on resolving the dispute in 15 days. If the parties fail to find a compromise or resolve the issue, a lawsuit will be filed, and a ruling is issued within 30 days. The ruling will be followed unless one of the parties makes an appeal.

Whether you need legal advice on how to resolve the rental dispute in the simplest way or need someone to represent you to resolve rental disputes, Motei & Associates can provide you with the legal services you require.

Registering a branch of a foreign company without the need to UAE local sponsor

Ever since hints were dropped about foreign businesses not needing UAE local sponsors, a lot of foreign investors and entrepreneurs have been looking forward to the implementation of this new ruling.

To boost the country's competitive edge, the amended Commercial Companies Law allows company formation in Dubai by foreign nationals or companies and no longer required to have at least 51% UAE resident shareholders to register a branch and perform business activities in the emirates. 

The move has been anticipated for a long time and is expected to have a major effect on UAE's global standing. Along with the change, business setup in Dubai has become easier, especially for foreign investors who are looking for ways to grow their business during these difficult times. However, there are still requirements and guidelines that foreign companies must follow to start doing business activities in Dubai. 

Whether you're planning on establishing a new business or opening another branch to expand your business in the UAE, it is always recommended that you work with business setup consultants in Dubai to help you make guided decisions for the company. Just because it's easier to start a company now, this doesn't mean that you can throw caution to the wind when it comes to growing your business in the UEA. Be mindful of the guidelines and make sure you obtain all necessary paperwork and permits/licenses to legally operate in the country. While requirements may vary, you might be asked to submit the following:

● Completed application form

● Business plan

● Passport copies of shareholders/directors

● Specimen signatures of shareholders/directors

● Letter of intent

For licensing, you need to provide the following:

● Board resolution appointing a company manager/director

● Power of attorney given to manager/director

● Memorandum and articles of association

● Specimen signature of manager/director

● Photo of manager/director

● Share capital information

If you don't have enough time to familiarize yourself with the new guidelines and requirements, you may hire a legal consultant in Dubai to who can give you a walkthrough of the legalities in establishing a branch in the UAE, as well as help you determine problems that you may encounter in the future as the business grows. 

If you're a foreign national who needs legal advice in establishing a new branch for your business in Dubai or you need advice for an ideal business setup in the city, Motei & Associates can provide you with excellent legal services to meet the requirements of your business.

Free zone vs. Offshore Company

One of the most common issues encountered by business owners are entrepreneurs who wish to set up their business in Dubai is choosing between establishing a free zone or offshore company.

While both types have their own advantages and disadvantages, knowing the difference between each is crucial in deciding which option is a better fit for your business. Whether it's your first time to establish a business or you're new to this industry, here are some of the important details you need to consider about free zone and offshore companies for your business setup in Dubai.

Location of business operations

Free zone companies in Dubai and the UAE are allowed to conduct their business in the free zone if they meet the requirements for company formation in Dubai. They can be 100% owned by foreign investors and there is no need to have UAE nationals as shareholders.

Additionally, free zone companies are usually exempted from paying income and corporate taxes. These companies, however, are required to register with the Federal Tax Authority for the payment of Value Added Tax and other payments mandated by the law.

Offshore companies, while allowed to open bank accounts in the free zone or anywhere in Dubai, are not allowed to perform business activities or establish their office in the Emirate. Offshore companies may only operate outside the UAE. If you're considering a new venture in any of the emirates, you may enlist the help of business setup consultants in Dubai to discuss your options.

Residency and visas

Free zone companies and businesses may obtain residence visas for their shareholders and employees. Residency is sometimes included in the package to encourage investors and employees to join the company. The validity of visas may vary for different businesses in the free zone, but visa holders may process the renewal upon expiry.

Unfortunately, it is not possible for shareholders or employees to obtain residence visas under any offshore company. Since offshore companies are not allowed to do business in the emirate other than owning assets, you may need the help of a legal consultant in Dubai to know which type of visa you may apply for.

Costing

The cost establishing a business inside the free zone may vary depending on the location and reputation of the area or building. The number of UAE residence visas allocated, and other factors may also affect the cost of forming your company.

Establishing an offshore company is often cheaper depending on the area of incorporation. Aside from yearly corporate expenses, you may also investigate maintenance costs and other factors where you will need to allocate your resources. 

If you need legal advice in setting up a business in Dubai or advice on obtaining residence visas for shareholders and employees, Motei & Associates can provide you with excellent legal services to meet the requirements of your business.

Transfer of Ownership and Control When A Shareholder Dies

Losing a loved one can be painful, especially when it happens without warning. Difficult as it may be, those left behind are often put in a position where they must make crucial decisions and sometimes take over the responsibilities of the deceased. In the case of business owners and shareholders, the distribution of the deceased’s shares becomes a complicated matter if there are no existing provisions for the transfer of shares of deceased shareholders. Hence, it is essential to decide on this upon establishing the company.

What happens to the shares when a shareholder dies?

When a company shareholder dies, the ownership of their shares will be transferred to whoever inherits the shares as stated in the deceased shareholder’s will or under intestacy rules. However, the transfer will be subject to the company’s articles of association or shareholder’s agreement. Suppose the articles or shareholders’ agreements include restrictions on the transfer of shares. In that case, these will take precedence as they are often added to protect the company and the interest of the current shareholders.

Dealing with all of this while grieving can cause distress to all parties involved. Hence, business owners or shareholders are often advised to plan and produce a written document or agreement to cover these sensitive matters and ensure that procedures are in place to protect the business in case of an untimely death.

Once the company has an established process for its day-to-day operations, it is recommended that business owners or shareholders create articles of association that will determine how ownership of the company or shares will be handled if something happens to the directors or shareholders. If local and foreign investors own the company, you may consult with international law firms in Dubai on how ownership can be transferred.

Creating a shareholders’ agreement is also another good method to protect the company and the interest of its current shareholders. These documents may include more specific provisions on how shares will be distributed if a shareholder passes away. Certain conditions which prevent spouses, competitors, or certain individuals from inheriting/acquiring the shares may also be added to protect the business. Suppose you are not familiar with the legal process and regulations. In that case, you may hire an attorney in Dubai to assist you in creating shareholder agreements and other legal documents to address such issues.

If there are no specific provisions on the transfer of shares on death shareholders, Model Articles or Table A provisions will be implemented. According to these provisions,

1. The company shall recognize the transmittee as having a title to the share if it is passed to them.
2. The transmittee must produce evidence of entitlement to the shares in question as required by the directors or existing shareholders:
3. the transmittee may choose to become the shareholder or have the shares transferred to someone else. If the transmittee chooses this option, they must write to the company to express their intention to become the shareholder or transfer it to another individual.
4. the transmittee will have the same rights as the original holder had.
5. Transmittees do not have the right to attend or vote in general meetings or agree to a proposed written resolution unless they have agreed to become the holders of such shares.

If you need legal advice in creating a shareholders’ agreement or adding/changing conditions on existing articles to transfer the ownership of shares, Motei & Associates can provide you with excellent legal services to meet the requirements of your business.

Why use ADR (Alternative Dispute Resolution)? Pros and Cons

Several groups, especially large businesses, have been using Alternative Dispute Resolution or ADR to resolve disputes within the company or organization as it is faster and more effective than litigation. Over the years, its uses continue to expand, and companies now implement different alternative dispute resolution methods and policies for managing almost any type of conflict in the workplace.

 

Although it is deemed a more cost-effective and practical method to resolve disputes, companies should not always rely on ADR, especially when it comes to sensitive and complicated company matters where litigation is more appropriate. It is best to try and understand the advantages and disadvantages of alternative dispute resolution before deciding on which method you will use for certain situations.

 

Advantages of using ADR

• Confidentiality
  
   – ADR proceedings are private, and the information and agreements disclosed in these meetings are often kept confidential. Most companies prefer using ADR as it allows them to resolve issues without worrying too much about how it will affect the public’s opinion about the company.
• Saves Resources – Compared to going to a courthouse for litigation proceedings, ADR proceedings are more cost-effective. It is also more beneficial to the parties involved as it helps save time and money when conflicts can be resolved within the office. If you doubt how certain conditions will benefit you, you may consult with a lawyer from legal firms in Dubai.
• Preserves relationships – Unlike when you go to court, there is no need to have one winner and one loser using ADR. Both parties can settle their differences by coming up with a compromise or solution that will benefit all parties involved. When both parties are satisfied with the resolution, it will be easier for everyone to work with each other again and preserve their working relationship.

 

Disadvantages of using ADR

Used as stalling tactics – While ADR is commonly used to avoid resolving issues faster, some use it to delay the resolution and develop a more beneficial solution.

 

Decisions are final – Aside from some exceptions, the decision of a neutral arbitrator is final. The parties getting the shorter end of the stick may not be able to appeal the decision. If made in court, such crucial decisions may be appealed to a higher court for a better bargain.

 

Whether you need legal advice for your business or require assistance in alternative dispute resolution UAE, you may contact Motei & Associates to provide you with the legal services suited to your needs.