Ultimate Beneficial Ownership (UBO) is a natural person who owns or controls a company, trust, or legal entity, and benefits from its assets and profits. It is the real person behind a legal entity, who ultimately exercises control over the entity, whether directly or indirectly.
UAE recently replaced Cabinet Decision No. 34 of 2020 with Cabinet Resolution No. 58 of 2020 on the Regulation of the Procedures Related to Real Beneficiaries (“Decision”). Ultimate Beneficial Ownership (UBO) intends to enhance the transparency of UAE-registered entities. It also plans to develop effective and sustainable executive and regulatory mechanisms and procedures in respect of beneficial owner data and improve implementation to ensure International Compliance and global confidence
Electronic money institutions are subject to the law on the prevention of money laundering and the financing of terrorism under which they must satisfy client identification obligations. One such obligation consists in identifying the Ultimate Beneficial Owners (UBO) of their clients. BMS Auditing is offering the best management consulting in UAE by covering the full scope of UBO in UAE.
Objective of Ultimate Beneficial Ownership
In the UAE, companies are required to disclose their ultimate beneficial ownership information to relevant authorities as part of the government's efforts to combat money laundering, terrorist financing, and other illicit activities. The Regulations require companies licensed or registered in mainland UAE or one of the commercial-free zones to create and maintain a register of their ultimate beneficial owners and to submit UBO information to the Registrar.
The objective of the Regulations is to regulate the requirement for corporate entities to maintain registers listing
- the UBOs
- the partners or shareholders of a company
- where applicable, nominee directors.
According to the new resolution, companies licensed or registered in the UAE (excluding in the financial free zones) must create and maintain a register of their Ultimate Beneficial Owner (UBO) Declaration and should submit UBO data to the relevant registrar or licensing authority (“Registrar”).
The regulatory authorities require companies to maintain accurate and up-to-date records of their UBOs, which should include details such as the individual's name, nationality, address, and percentage of ownership. The disclosure of UBO information is important for transparency and accountability and helps prevent the misuse of companies for illegal activities. It also helps financial institutions and other businesses to assess the potential risks associated with their clients and business partners, and take appropriate measures to mitigate those risks.
What are the Exceptions of Ultimate Beneficial Ownership?
The Regulations do not apply to companies that are directly or indirectly wholly owned by the federal or local government or their subsidiaries, as well as companies that are registered in the financial free zones in the UAE, namely the Abu Dhabi Global Market and the Dubai International Financial Centre.
Ultimate Beneficial Owner (UBO) Declaration
The Regulations define UBOs as:
- Whoever owns or controls, through direct or indirect ownership, at least 25% of the entity’s shares or whoever has a voting right of at least 25 percent of the shares.
- If no UBO is identified in accordance with the above, or there is any doubt that any natural person identified as a UBO is the true UBO, the natural person who exercises control over the entity through other means will be considered as the UBO.
- If none of the conditions above are met, then a natural person who is responsible for the senior management of the entity will be considered as the UBO.
Certain information must be included in the register of UBOs. This includes without limitation, the name, nationality, place of birth, residential address, and travel ID card number (and date of issuance and expiry) of the UBO. The reason why the individual is classified as a UBO and the date on which the person became a UBO or ceased to be a UBO (if applicable) must also be provided.
The requirement to maintain a register of UBOs does not apply to entities that are owned by:
- Company listed on a recognized stock exchange that is subject to disclosure requirements that ensure sufficient transparency of its beneficial owners;
- Company wholly owned by such a listed company. The Regulations do not provide further information on recognized stock exchanges.
Partners & Shareholders
For the register of partners or shareholders, a company must maintain the details of its partners or shareholders as set out in the Regulations and update such register with any change occurring within 15 days from the date of the change.
The register of partners or shareholders must include certain information, including without limitation, the number of shares held by each partner or shareholder, the voting rights attached to such shares, and the date of acquisition of shares by each partner or shareholder. Information on each partner and shareholder (whether a natural or legal person) listed in the register must also be provided as set out in the Regulations.
The register of partners or shareholders must also include information on any partner or shareholder acting as a “trustor” or “nominee board member.” The Regulations define a “trustor” as a natural or legal person who transfers the management of their funds to a trustee by virtue of a deed.
Deadlines for the submission of Ultimate Beneficial Ownership (UBO)
The filing deadline of the register of UBOs and the register of partners or shareholders of existing entities is June 30, 2022 or at the time of incorporation/registration of a new entity. The Registrar may request additional information beyond that required in the Regulations.
How BMS Auditing can help?
- Current Status Overview
- Assistance in UBO Registration
- Regular Review
- Management Consultancy related to UBO declaration
- Maintenance of UBO register
- UBO record maintenance