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Ultimate Beneficial Ownership (UBO) Declaration in UAE

The United Arab Emirates Cabinet has issued a Cabinet Resolution no (58) of 2020 in relation to Ultimate beneficial Ownership. It came into force on 28 August 2020. This regulation was brought into force in order to enhance corporate transparency.

This resolution is applicable to all entities that are registered in the UAE mainland and free zones. There are some exceptions in these cases which will be further discussed below.

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ULTIMATE BENEFICIAL OWNERSHIP

The United Arab Emirates Cabinet has issued a Cabinet Resolution no (58) of 2020 in relation to Ultimate beneficial Ownership. It came into force on 28 August 2020.

This regulation was brought into force in order to enhance corporate transparency. This resolution is applicable to all entities that are registered in the UAE mainland and free zones.

There are some exceptions in these cases which will be further discussed below. The ultimatum of this resolution is to maintain a UBO register and supporting documents in the business place at all times and that shall be updated and modified and such modifications shall be reported to the authorities of such changes that are made in the register.

This helps to decrease monetary fraud at the corporate level. The base reason for UBO identification is to prevent money laundering and other financial misappropriations by business entities.

Who is an Ultimate Beneficial Owner?

A person or party who owns or controls 25% of a company’s shares and/or voting rights. Such a person will be the sole beneficiary of all transactions made by the company.

UBO IDENTIFICATION:

  1. According to the Resolution passed by the UAE Cabinet, UBO is a person who directly or indirectly owns and controls a company.
    This means:

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    • The person owns 25% or more of an entity’s shares
    • Has at least 25% of voting shares
    • Controls the entity through any other means such as appointing or dismissing the majority of directors
  2. If such a natural person as mentioned in (1) is not available, UBO will be a person who has control over the company through other means.
  3. If no natural person identified via conditions mentioned in (1) and (2), a person appointed by higher management shall be considered as a UBO
  4. If any of the conditions specified above are satisfied by one or more persons, then everyone shall be considered as UBO

Beneficial Owner:

A beneficial Owner is a person different from Ultimate Beneficial Owner. Beneficial Owners are those people who hold shares in the Company.

According to the Resolution passed by the UAE Cabinet, all entities licensed in UAE have to declare their UBO except the following:

  • Legal entities licensed in Free Zone
  • Legal entities that are directly or indirectly under the control of the Emirate or Federal government

Legal Entity:

  • When a company is registered and licensed, it is expected to provide the required details correctly.
  • Companies must share their trade names and official address in Emirates
  • Once UBO is identified and declared, then it shall be recorded in the UBO register and shall be updated and modified from time to time.
  • Companies should provide all data regarding UBO within 60 days of the registration and license of the company is completed. The legal person shall submit any amendment or modification with the authorities within 15 days of amendment or modification of the register.
  • Provide information in the register and the same shall be provided to the authorized personnel.

How to verify Beneficial Owner?

For verifying a UBO, the following steps shall be taken:

  1. Obtain a legal entities certification to check whether the company is registered
  2. Acquire data on a legal entity’s ownership chain in order to determine all persons who have direct or indirect ownership in the entity through shares or interests.
  3. Compare the ownership share, share percentage, and management control of all beneficiary owners. It will help us to identify the individuals with the greatest amount of control in the company.
  4. Compare the ownership and control levels of each BO with the UBO identification conditions outlined by resolution 58. And the person who meets the requirements will be the UBO. 

REGISTER

It involves the identification of UBO and gathering data related to which is to be entered in the UBO register. The requisites for the legal entities to produce and maintain are as mentioned below:

  • Register of Beneficial Owner
  • Nominee Board Member information
  • Register of Partners or Shareholders

Register of Beneficial Owner

It contains information about the Company’s identified UBO. Requisite data of UBO that are to be maintained for the register are mentioned below:

  • Name, place, and date of birth
  • Nationality
  • Addresses to which notices shall be sent
  • ID Card, passport number, issuing country, validity details of passport
  • Date and basis on which the individual became the company’s UBO

After successful completion, the entities will receive a certificate for the same which proves that the Company has verified its UBO and it mandates to maintain UBO register in the place of business. This certificate can go invalid if the company faces any law enforcement that is in connection to financial misappropriations.

Frequently Asked Questions?

1. What is UBO declaration in UAE?

a. According to the Resolution passed by the UAE Cabinet, UBO is a person who directly or indirectly owns and controls a company.

This means:

  • The person owns 25% or more of an entity’s shares
  • Has at least 25% of voting shares
  • Controls the entity through any other means such as appointing or dismissing the majority of directors

b. If such a natural person as mentioned in (1) is not available, UBO will be a person who has control over the company through other means.

c. If no natural person identified via conditions mentioned in (1) and (2), a person appointed by higher management shall be considered as a UBO

d. If any of the conditions specified above is satisfied by one or more persons, then everyone shall be considered as UBO.

2. Who is a UBO in a Company?

UBO is an individual who holds most amount of control in the company and owns maximum benefits from the business.

3. How to submit UBO in UAE

To submit online:

  • Browse to ded.ae
  • Go to e-services
  • Add/ modify beneficiary
  • Login with UAE pass

Fill in required data and upload documents

To submit in person: Authorized representative of the entity shall go in person to the service center and submit necessary documents

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