Identifying the Ultimate Beneficial Owner

Ministerial Order No. 83 of 2020 (“Ministerial Order”) requires all commercial entities in Bahrain to disclose their Ultimate Beneficial Owner (UBO) information, except those licensed by the Central Bank of Bahrain. This measure aims to strengthen market transparency and safeguard the interests of Bahrain’s consumers, shareholders, partners, and investors.

By requiring the disclosure of UBO information, the government aims to prevent the misuse of corporate structures for illicit activities and uphold Bahrain’s reputation on the international stage, particularly in combating financial crimes and money laundering.

This article provides a brief overview of the Ministerial Order, which aims to ensure adherence to Financial Action Task Force (FATF) standards.

Definition of UBO

The natural person(s) who ultimately owns or controls a registered person and/or the natural person(s) on whose behalf a transaction is being conducted. It also includes those person(s) who exercise ultimate effective control over a legal person or arrangement.

Most prominent conditions

  • Owning or controlling, directly or indirectly, a percentage equal to or exceeding 10% of the capital or voting rights of the registered person.
  • Where the registered person is a legal person owned by another legal person or legal arrangement, then the UBO is the natural person who is the ultimate owner of the ownership chain or who exercises effective control over it. Natural person(s) who may exercise control through management positions within the registered person in such a way that affects the strategic decisions or influences the general direction of the registered person.

Responsibilities of the Holder of Controlling Interests

The Ministerial Order mandates that holders of controlling interests submit an electronic statement specifying information about the UBO of their interest in the registered person. This submission is required during the registration request or within three working days of any amendments to their interest. The statement should include details such as the UBO’s full name, passport number, identity card number, copies of valid identification documents, tax residency jurisdiction, Tax Identification Numbers, and contact details.

Responsibilities of the Registered Persons to Provide and Update Details of the UBO

Registered persons must provide any other details related to the UBO as the concerned directorate requires. This responsibility ensures that the information regarding UBOs remains accurate and up to date within the commercial register.

Procedures for Violations of the Ministerial Order regarding UBO Disclosure

In the event of non-compliance, the Ministry of Industry and Commerce possesses the authority to implement various measures. These include suspending CR, with the most severe repercussion being the removal of the entity from the commercial register, effectively terminating its commercial activities in Bahrain. The Ministry of Industry and Commerce may impose administrative fines, with the possibility of additional fines in severe or recurrent instances of non-compliance.

In conclusion, the Ministerial Order signifies a paradigm shift in Bahrain’s commercial landscape. By mandating the disclosure of UBO information, the government underscores its commitment to transparency, integrity and international best practices.

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