The Bahrain Ministry of Industry, Commerce and Tourism (MOICT) has recently passed a resolution concerning the standards, requirements and rules to determine the ultimate beneficiaries (UBO Resolution).

The resolution aims to prescribe rules and guidelines for determining who falls under the definition of an Ultimate Beneficial Owner (UBO). The MOICT has also published supplementary guidance and clarification as to the application of the UBO Resolution, said a statement from Al Tamimi & Company.

With the exception of entities which are licensed and regulated by the Central Bank of Bahrain (CBB), the UBO Rules apply to all natural or legal persons who are registered with the MOICT and have a Commercial Registration (CR) (Registered Person(s)). Such will include registered companies as well as branches of foreign companies, it said.

Amongst other obligations, the Registered Person must now provide the MOICT with all prescribed information and copy documents relating to its UBO(s), and has a continuing obligation to update such information and documents immediately (if applicable) upon a change of UBO(s) or their details.

Definition of a UBO

As per Article 3 of the UBO Resolution, any natural person or persons who satisfy any of the following factors will be deemed to qualify as a UBO with respect to any Registered Person:

1.    Owning or controlling, directly or indirectly, 10% or more of the Registered Person’s capital or voting rights;

2.    Having the ability to make or influence decisions of the Registered Person either directly or through other means such as personal communications or through participation in the financing of the project, a family relationship, any contract, arrangement or understandings, or through a hierarchical entity (in the ownership chain of legal entities);

3.    Contributing towards the financing of the business of the Registered Entity or its assets or benefiting from the Registered Person’s transactions;

4.    Having effective ultimate control of the Registered Person through a series of ownership or other control instruments other than direct control;

5.    Having direct or indirect control over the operations of the Registered Person, whether through a management agreement, power of attorney or similar instrument;

6.    Where the Registered Person is an entity owned by another entity, then the UBO is the natural person who is the ultimate owner of the ownership chain or who has effective control over it; and/or

7.    Exercising control through management positions within the Registered Person in such a way as affects the strategic decisions or influences the general direction of the Registered Person.

Where with respect to any given Registered Person, the application of the above factors results in there being multiple UBOs, then the relevant information and documents must be submitted to the MOICT with respect to each of the UBOs.

It is also apparent from the MOICT guidance that the same natural person or persons may be the UBO(s) for more than one Registered Person / Commercial Registration (CR).

Submission of UBO information and documents to MOICT

The UBO Rules prescribe a variety of items of information and documents which are to be submitted by a Registered Person to the MOICT with respect to each of its UBOs including the following:

•    Full name(s);

•    Passport Number and copy passport;

•    Identification Card Number and copy of Identification Card Number (if applicable);

•    Details of country of tax residence of UBO and UBO’s Tax Identification Number in the country of tax residence (if applicable); and

•    Residential address, email and contact phone number for UBO(s).

Timeline for submission

For Registered Persons which currently have a Commercial Registration (CR), the UBO information and documents should now be submitted to the MOICT without delay. It is expected that in the near future the MOICT will impose a deadline for existing Registered Persons without registered UBO(s) to submit the information and documents for its UBO(s), failing which sanctions may be imposed by the MOICT.

With respect to persons seeking to register a new Registered Person (for example, establishing a new commercial company) the required UBO information and documents are to be supplied to the MOICT at the time of applying for the Commercial Registration (CR).

In all cases the information and documents are to be uploaded to the Sijilat online portal of the MOICT.

Once submitted to the MOICT, the UBO(s) information and documents shall be valid for one year, with a requirement to confirm (or update) the information and documents annually (or earlier if there is a change in the UBO(s) or their information)

Penalties for non-compliance

Where the Registered Person refuses or fails to provide the MOICT with all required information and documents of the UBO(s) or provides incorrect information or documents, the following sanctions may be imposed by the MOICT:

•    Suspension of the Registered Person’s Commercial Registration (CR) for a period of up to six (6) months;

•    Cancellation of the Registered Person’s Commercial Registration (CR); and

•    Imposition of financial penalties.

What you should do next

It is important for your Bahrain based businesses to:

1.    Apply the UBO Rules to their business to ascertain the identities of its UBOs

2.    Adhere to the obligations imposed on Registered Persons by virtue of the UBO Resolution; and

3.    Ensure that the required information and documents are submitted with the MOICT without delay.
How we can help

Al Tamimi & Company, a leading law firm in the Mena region and with strong corporate structuring experience across all industry sectors in the region, is well placed to assess the impact of the UBO Rules on your organisation and to assist you with the relevant application to the MOICT to ensure a successful registration of the UBO(s),a company statement said. – TradeArabia News Service