Legal & Compliance
Legal & Compliance
The areas we address at Corporate Group under legal & compliance are as follows:
- Liquidation Services
- Economic Substance Regulations (ESR)
- Ultimate Beneficial Ownership (UBO)
Company Liquidation or winding up a company is a complex task in the UAE which requires a lot of the ticks in the checklist, clearance statements from the relevant authorities, and closure of business as per compliance to get a clean exit.
We’ll cover each step & procedure for company liquidation starting from the authority’s clearance, and documentation gathering till the final step of getting the liquidation report.
Corporate Group liquidation services include;
- Liquidation of mainland companies
- Liquidation of Free Zones companies
- Liquidation of offshore companies
Economic Substance Regulations (ESR)
The UAE applies Economic Substance Regulations (ESR) to local companies located in the country from 30th April 2019 through a Cabinet of Ministers resolution No. 31 of 2019 along with the Ministerial Decision No. 215 of 2019.
These regulations have now been repealed and replaced by the new Cabinet resolution No. 57 dated 10th August 2020 and Ministerial Decision No. 100 of 20th August 2020 require UAE onshore and free zone companies and certain other business forms that carry out any of the defined “Relevant Activities” listed below to keep and exhibit a sufficient “economic presence” in the UAE relative to the activities they undertake (“Economic Substance Test”).
- Banking Business
- Insurance Business
- Investment Fund Management Business
- Lease-Finance Business
- Shipping Business
- Holding Company Business
- Intellectual Property Business
- Headquarter Business
- Distribution and Service Centre Business
These companies must provide the regulatory authorities with economic substance notifications, including preliminary information about the activities. This notification is a prerequisite for submitting an economic substance report by the company.
The Economic Substance Test requires a Licensee to demonstrate that:
- the Licensee and Relevant Activity are being directed and managed in the UAE;
- the relevant Core Income Generating Activities (“CIGAs”) are being conducted in the UAE; and
- the Licensee has adequate employees, premises and expenditure in the UAE.
- Notifications- Conducting Relevant Activities
- Submit within Six months from the Entity Financial year End.
- Economic Substance Reports- Earning Relevant Income
- Submit ESR report within 12 months from the end of its financial Year.
Why require ESR Compliance:
The Economic Substance Regulations bring the specific requirements for businesses to demonstrate that their actual economic activity is in UAE and it is not driven solely to benefit from a low or non-tax jurisdiction. Thus, preventing the harmful tax practice of profit shifting from high-tax jurisdictions to low tax regimes.
Penalties for non-compliance are as follows:
If failure continues in the second consecutive year, the amount of penalty is increased to an amount of AED 400,000 in the subsequent year.
How Corporate Group Experts can help?
- Determine in-depth the appropriate Relevant Activity
- Conduct and assist in ESR Test
- Review past fillings (Analyze/ Re-analyze the applicability of ESR)
- Assist in submitting the Notification and ES Report
- Assist in responding to queries from relevant UAE authorities
- Assist with the appeal procedure, if applicable.
Ultimate Beneficial Ownership (UBO)
Cabinet Decision No. (58) of 2020 Regulating the Beneficial Owner Procedures.
The entities in UAE are required to disclose their Real beneficiaries or Ultimate Beneficial Owner’s details, enhance global confidence and improve compliance, which intends to enhance the transparency of the UAE-registered entities.
All entities must require disclosing their UBO details to the relevant authorities in the UAE as per their licensing authority’s deadlines.
How Corporate Group can help you?
- Prepare the UBO’s partners and shareholders’, director/manager nominees’ registers (if applicable).
- UBO declaration
- Inform the relevant authorities and update registers about changes and amendments to the information provided.
Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT).
Federal Decree No. 20 of 2018 on Anti-Money Laundering and Countering the Financing of Terrorism was issued to establish a legal framework for complying with international standards on anti-money laundering and countering the financing of terrorism.
Anti-money laundering (AML) refers to the web of laws, regulations, and procedures aimed at uncovering efforts to disguise illicit funds as legitimate income.
- AML regulations require financial institutions to develop sophisticated customer due diligence plans to assess money laundering risks and detect suspicious transactions.
Annual AML/CTF Risk Assessment Report
It is an obligation to file an annual AML/CTF risk assessment report to the Ministry of Economy (MoE) for all Designated non-financial businesses and Professionals.
Providing wrong information or lack of compliance is taken seriously and will likely be penalized by the authorities. Anti-Money Laundering (AML) violators may face administrative fines ranging from AED 50,000 to 1,000,000.
How Corporate Group can help you?
- Corporate Group helps you in Registration in the goAML system
- Risk Assessment
- Develop AML/CFT Policies and Procedures
- Assign Compliance Officer
- Perform Know Your Customer (KYC) checks
- Training and Awareness
- AML/CFT Corporate Advisory
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