The UAE Cabinet had issued a Cabinet Resolution No. 58 of 2020 concerning Regulation of the Beneficial Owner Procedures (“UBO Regulations”).

The UBO Regulations lay down framework for reporting details of ultimate beneficial owners (‘UBO’s), their interest and nominee directors / trustees. Obligations under this regulation are applicable to all establishments registered or licensed in the UAE. However it is not applicable to entities incorporated in financial free zones (since DIFC and ADGM have their own regulations) and entities owned by UAE local or Federal Government.

The concept of an Ultimate Beneficial Owner can be confusing to many businesses. In the article below we have tried to provide the meaning of an Ultimate Beneficial Owner (UBO) and have also explained how you can identify a UBO.

Definition of a UBO:

  • A Beneficial Owner is a Natural Person who ultimately owns or controls or has right to vote over at least 25% of the shareholding of the company whether directly or indirectly through a chain of ownership or control, who has the right to appoint or remove the majority of the directors of the company.
  • Where no such natural person is identified or where there is doubt whether a natural person is exercising ultimate control, the natural person who otherwise controls the company is considered as the ultimate beneficial owner of the company.
  • If no such individual has been identified, the natural person holding the senior management position will be considered as the Ultimate the Beneficial Owner.

Further, in case of listed companies or their subsidiaries, disclosure made by such entities to relevant stock exchanges can be considered as a proof of beneficial ownership.

Definition of a UBO:

  • A Beneficial Owner is a Natural Person who ultimately owns or controls or has right to vote over at least 25% of the shareholding of the company whether directly or indirectly through a chain of ownership or control, who has the right to appoint or remove the majority of the directors of the company.
  • Where no such natural person is identified or where there is doubt whether a natural person is exercising ultimate control, the natural person who otherwise controls the company is considered as the ultimate beneficial owner of the company.
  • If no such individual has been identified, the natural person holding the senior management position will be considered as the Ultimate the Beneficial Owner.

Further, in case of listed companies or their subsidiaries, disclosure made by such entities to relevant stock exchanges can be considered as a proof of beneficial ownership.

Obligations: The UBO Regulations lays down framework for reporting details of Ultimate Beneficial Owners, their interest, trustees as well as nominee directors.

1. UAE companies must comply with the reporting obligations prescribed by the UBO Regulations and maintain:

  • Register of shareholders,
  • Register of ultimate beneficial owners and
  • Register of nominee directors.

2. Companies were required to file the above stated information with the relevant Registrar / licensing authorities by 30th June 2021 or any earlier deadline as may be announced by respective licensing authority. The original deadline was to submit the details before 60 days of the enactment of UBO Regulations.

3. Companies must notify the Registrar of any change or amendment to the information provided within 15 days of such change or amendment.

4. Companies must designate an individual whom Registrar may contact for matters of such disclosure.

5. Each company must take reasonable steps to ensure transparency, to obtain accurate information regarding the beneficial ownership and update the information on the registers on an ongoing basis.

Consequences of Non – Compliance:

A written warning followed by a penalty of AED 100,000 and in the event of repeated violation it could also lead to suspension of license at least for a year.

The UAE has made progress in the fight against the financing of terrorism, money laundering, and other illicit acts with the implementation of laws like the Ultimate Beneficial Ownership. Additionally, the UAE's commitment to the OECD's BEPS measures is compatible with this choice.

Our team can provide additional advice and proper direction on this legislation and development to help you comply with the regulation. Should you have any queries or require support, please reach out to us!