Newly incorporated companies often seek to open a bank account in the UAE. If the process might happen to be quite simple for free zone and onshore companies, the same cannot be said for offshore companies. UAE banks are becoming more and more reluctant to open bank accounts for offshore companies and the list of required documents is getting longer.
Required documents for the opening of the bank account
UAE banks will usually require viewing the original corporate documents of the company wishing to open the account. The list of these required documents might differ from one bank to another. However, the following documents are commonly required: certificate of incorporation, memorandum and articles of association, share certificate, certificate of good standing or letter of incumbency, shareholder or board’s resolution, passport copies of the shareholders, personal bank statements of the shareholders, proof of residence of the shareholders and signatories.
If the corporate shareholder of the company opening the account is not incorporated in the UAE, some of the above documents (such as certificate of good standing or letter of incumbency) might not be available in their home jurisdiction. In this case, the bank will decide on a case to case basis the documents it will require instead.
Additional requirements for the authorized signatory
Some UAE banks might require additional documents upon their discretion. Most of the banks require the authorized signatory to come in person in order to register his signature. Also, recently, a few UAE banks are even requiring the authorized signatory to have a residence visa in order to open the account.
The issue of the Ultimate Beneficial Owner (UBO)
According to the Central Bank’s notice no. 2922/2008 dated 17 June 2008, “banks and other financial institutions are required to identify the beneficial owners of companies and businesses opening accounts or remitting money and should obtain satisfactory evidence of their identities”.
The notice further indicates that “in order to carry out the obligations set out as above, banks and other financial institutions should clearly understand the ownership and control structure of all legal entities. In the event of any person claiming to be acting on behalf of another, such a person must have proper legal authority to do so”. Therefore, most banks will require all the corporate documents mentioned in point 1 to be provided until they can identify the UBO.
Choosing between a conventional or an Islamic bank
The UAE’s banking system offers a number of options in terms of bank agencies, including the option between conventional or Islamic banking. Their differences are mainly conceptual and relate to profit-making. Because of the prohibition of the payment of interests under Islamic law, Islamic banks refuse to earn their money by charging interest and fees for services. Conventional banks make their income mostly from loans whereas Islamic banks will earn their income on the basis of the profit and loss sharing principle.
However, most of Islamic banks offer the same products and services as conventional banks. Therefore, the differences between the two types of banks are not really fundamental when it comes to basic corporate banking services.
The paperwork required for the opening of a bank account in the UAE is often a surprise to many offshore companies. If some of the requirements are determined by each bank, the Central Bank’s regulations have to be taken into account as well. The complexity of the bank account opening is mainly dependent on the identification of the UBO: the more difficult his identification, the longer the bank account opening.
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