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NEDs in the context of Economic Substance Regulations

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by GetNED Publications

NEDs in the context of Economic Substance Regulations

by GetNED Publications

NEDs in the context of Economic Substance Regulations

ESR took effect on 30 April 2019. There are a number of actions in which relevant Licensees must undertake to ensure compliance with ESR, chiefly the management of the Licensee from the UAE.

A UAE resident Non-Executive Director (NED) is the perfect solution for many Licensees who are seeking to comply with the ESR from a practical and cost-effective standpoint.

Retaining at least 1 UAE resident director – possibly doubling as company secretary – is both best practice and the prudent approach to evidence management being carried in the country.


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NEDs and Economic Substance (“ESR”)

Pursuant to ESR, certain companies deploying a “relevant activity” have to demonstrate that they have effective substance in their jurisdiction by satisfying a so-called “economic substance test”. ESR is in force in the UAE since 30th April 2019.

A company meets the test if it is directed and managed in the UAE and has adequate people, premises and expenditure in the country.

In this context, the composition and competence of the board of directors – composed of both executive director(s) and NED/s –, and the proper recording of minutes of all board meetings are key factors when assessing whether a company is compliant or not.

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