Ultimate Beneficiary Owner

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UBO Regulations in the UAE: Upholding Transparency, Compliance Requirements, and Business Integrity with Xecutiv FBS

In the United Arab Emirates (UAE), transparency and compliance with international standards have become paramount. One crucial aspect of this is the Ultimate Beneficiary Owner (UBO) rules. These regulations aim to identify and disclose the true owners of businesses operating within the UAE.

The United Arab of Emirates replaced Cabinet Resolution No. 34 of 2020 with Cabinet Resolution No. (58) of 2020 regulating Beneficial Owner Procedures (the “Resolution”).

The Resolution covers the most updated requirements for the entities in UAE to disclose their Real beneficiaries or Ultimate Beneficial Owners, which intends to enhance the transparency of the UAE-registered entities. Similarly, it intends to improve compliance and global confidence in international data by developing effective and sustainable executive and regulatory mechanisms. For the UAE authorities Identifying the UBO is essential for preventing money laundering, fraud, and ensuring tax compliance.

All entities in the UAE (unless excluded by the Resolution) must prepare and maintained registers of UBOs, Shareholders (Partners) and Nominee Directors.

The UBO is the person, or entity, that ultimately owns or controls a legal entity, whether directly or indirectly. It is the ultimate beneficiary when an institution initiates a transaction.

Let's take a simple example: If a person named ABC owns significant shares in Company X, and Company X itself further owns significant shares in Company Y, then the person named ABC would be seen as the UBO of Company Y.

 

Real Beneficiary or Ultimate Beneficial Owner is someone who:

  • Owns or controls 25% or more of the shares or voting rights;
  • Ultimately owns or controls, directly or indirectly, 25% or more of the shares or voting rights;
  • Holds the right, directly or indirectly, to appoint or remove most of the board of directors;
  • Has the right to exercise, or exercises, significant influence or control over the legal entity;
  • Exercises ultimate control over the management; or
  • Controls the legal entity

The UBO Resolution applies to ALL Entities (both mainland and free zones) licensed in the UAE, excluding the following:

  • Public Shareholding companies
  • Companies owned 100% by federal or local government agencies or companies affiliated with companies owned 100% by the state as well.
  • Create and maintain a Register of Real Beneficiaries and a Register of Partners or Shareholders.
  • Submit the information stated in this decision to the competent licensing authorities.
  • Entities must notify the relevant Registrar of any change or amendment to the information provided within 15 days of such change or amendment
  • Full name, nationality, date, and place of birth
  • Place of residence or address (for correspondence under this Decision)
  • Number of travel document or ID card, country and date of issue, and expiry date
  • The basis on which he became a Real Beneficiary of the legal person and the date when he acquired such capacity 
  • The date on which the person ceased to be the Real Beneficiary
  • Full name, nationality, date, and place of birth
  • Place of residence or address (for correspondence under this Decision)
  • Number of travel document or ID card, country and date of issue, and expiry date
  • Number of shares owned, category thereof, and the voting rights associated thereto
  • Date of acquisition of capacity as Partner or Shareholder
  • In case of Partner or Shareholder is a legal person, Name, legal form and Memorandum of Association, Address of the main office, Name of senior management personnel (and all personal identification documents) and in case of a foreign shareholder or Partner, name and address of the legal representative in UAE

  • Penalty for violating real beneficiary procedures – Written warning followed by a fine of AED 100,000, in the event of repeated violation which could lead to suspension of license for at least a year.

     

    At Xecutiv FBS, we prepare registers of the UBOs, Partners / Shareholders and Nominee Directors / Managers (if applicable), in accordance with the Resolution. We do the filings with the authorities and we also inform the relevant authority of any changes or amendments to the information provided.

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