Ultimate beneficial Ownership UAE
Ultimate beneficialOwnership
UAE
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Cabinet Resolution 58 was issued by the UAE government on 28 August 2020 and was brought in place of Cabinet resolution 34. The main objective of this was to regulate Ultimate Beneficial Ownership Procedures by making corporate affairs more transparent and reportable. This new resolution covers the guidelines for both new and existing companies. With a few stated omissions, this resolution covers all legally registered entities in mainland UAE and all the free zones included business bay.
The most important addition in this new resolution is that it mandates preparation, maintenance, and creation of supporting documents through an Ultimate Beneficial Owner (UBO) Register. This register is always to be kept handy on their premises. This document is an honest and fair reflection of activities, and the relevant authorities are supposed to be notified if any change is made in this register.
As directed by the resolution, maintaining a register will now be a mandatory requirement for all business entities, it is essential that all such organizations develop a clear understanding of the legal requirements mentioned in Resolution 58 and all the associated filing processes associated with it. But first, it, is important that we understand the meaning of “ultimate business bay”.
What is an Ultimate Beneficial Owner?
The control of this individual or party can both be direct and indirect. Resolution Cabinet 58 provides straightforward application guidelines to all relevant companies which they must follow in letter and spirit.
UBO
Identification
As mandated by the resolution, the UBO shall be the person who, directly or indirectly, owns and controls a company. Individuals with ownership of at least 25% shares and voting rights of a company or someone with the power to dismiss and appoint most of a company’s directors shall be considered as a UBO.
In case there is no natural person who meets the above-mentioned conditions, then the UBO shall be someone who has control over a company through other means.
If no natural person can be identified who meets the conditions stated in the first two points, a person appointed to a higher management position in the company will be considered as the UBO.
If the conditions stated for identifying a UBO are shared by more than one person (e.g. 25% of voting rights are shared by two individuals) then all of them will be identified as joint ultimate beneficiaries.
The Register must include, for each real beneficiary, the following details:
Full name, nationality, and date and place of birth. Place of residence or notice address.
The basis on which the natural person is identified as a beneficiary.
Passport or identification number, country, and date of issue and expiry.
The date on which the person became a Real Beneficiary, and if applicable, the date on which they ceased to be one.
Ultimate Beneficial Owner
Vs Beneficial Owner
Declaration
The requirement is simple. Resolution 58 requires all legally registered business entities in the UAE, to declare their UBOs EXCEPT the following:
All those Legal Entities who have their licenses in free zones (Dubai International Financial Center and Abu Dhabi Global Markets)
All those legal entities are directly or indirectly owned by the Emirate or Federal government.
Resolution 58 does not require entities licensed by free zones to nominate and declare their UBOs. Since most financial free zones have their own arrangements in place for identifying and declaring UBOs. Every free zone handles this matter in its own manner. Resolution 58 clearly identifies the basic conditions for a person/party to be qualified as a UBO and they are pretty much aligned with what free zones authorities also mandate. In case more information is desired regarding UBOs, organizations can contact the client relation teams of the relevant free zone.
Legal Entity’s
Responsibility
At the time of their registration and licensing, companies are expected to provide all required details accurately.
Companies should share their trade name and their official address in the Emirates on all their documents.
If there is a doubt about who is the real beneficiary, the company should intimate this to all its beneficial owners.
Once the UBO has been identified and declared, companies must provide relevant details of the UBO in the register. They must also make sure to keep the register updated. Any changes that a company becomes aware of, should be amended in the register within 15 days after the change came to notice.
Companies should provide all data regarding their UBO (and other requirements of the resolution) no later than 60 days after the enactment of cabinet resolution 58. Or no less than 60 days after the registration and licensing of a company has been completed.
Provide information to the registrar as required. The same information must be shared with authorized personnel.
Any changes made in the data shared with the registrar must be intimated to the registrar within 15 days of making the changes.
Example We have established that a UBO is someone who gains the ultimate benefit from a legal entity’s decisions. Let us look at some examples of UBOs to further clarify the concept:
Example 1 XYZ is an overseas company that has 100% ownership of 336 FZ-LLC, a company in a free zone in the UAE. The shares of XYZ are equally distributed amongst Mr. L and Mr. N (50% each). This makes Mr. L and Mr. N both the UBOs of 336 FZ-LLC. Note that this does not make them UBOs of XYZ.
Example 2 ABC Group of companies is a parent company of 5 companies: A, B, C, D, E. Each of the five companies is owned by an individual. Khalifa owns company A, Peter owns company B, Brown owns company C, and Elizabeth owns company D and E. ABC’s ownership is divided equally amongst its 5 companies, meaning that A, B, C, D, and E each represent 20% of XYZ’s total equity. Since Elizabeth owns companies D and E, she has a share of 40% in ABC. This means that she is the UBO of XYZ.
How to Verify
Ultimate Beneficial Owner
Acquire a legal entity’s credentials to check whether the company is registered and legitimate.
Acquire data on a legal entity’s ownership chain to determine all persons who have direct or indirect ownership in the entity through shares or interests.
Compare the ownership share, share percentage, and management control of all beneficiary owners. This will help you identify the individuals with the greatest amount of control in the company.
Compare the ownership and control levels of each BO with the UBO identification conditions outlined by resolution 58. The individual who meets the conditions will be the UBO.
Register
Register of Beneficial Owner
Nominee Board Member information
Register of Partners or Shareholders
Full name, place, and date of birth, and nationality
ID card or passport number, issuing country, and the issue and expiry dates
The date on which the individual stopped being the company’s UBO.
Residential address(es) to which notices shall be sent.
The date and the basis on which the individual became the company’s UBO.
Details regarding all the data needed to compile the above-mentioned documentation are mentioned in detail in the Cabinet Resolution 58/2020’s guidelines.
Gathering information on a UBO and then compiling documentation for submission can be an extensive and delicate process. Having expert help from a third party like ebs can make all the difference.
ebs is a Consultancy Agency that is an expert in helping businesses adhere to governmental compliance properly. ebs can assist you with:
Analyzing your ownership chain and verifying UBOs.
Help you collect data for your UBO, Nominee Directors/Managers, Partners/Shareholders registers, and compile them. They can make sure that your document follows the resolution’s guidelines to the letter.
Help you arrange the filing process with the authorities.
Help you maintain your registers and make sure that all information in them is updated.
Certificate
if a company ever faces law enforcement in matters related to financial malintent, a UBO Certificate can prove to be invaluable. The Certificate is issued by the Licensing Authority that is in charge of the registration of companies in a state.
How can
ebs Help?
Current Status Overview:
We have the expertise needed to provide you with the necessary guidance. We can help collect and verify all the initial information that you must register with your authorities.
Assistance in Registration:
After collecting the needed data, it can be organized and compiled according to the guidelines provided by the authorities. It is made sure that registration submission is free of errors and in accordance with the resolution.
Provide Continuous Support:
During the registration process, entities are often required to present more information as required. We can help you prepare any further data that you need quickly and reliably.
Regular Review:
Business registered entities are required to notify the authorities of any amendments in the data that they provide in their registers. We can monitor all amendments in your data and act swiftly whenever an update needs to be provided to the authorities. We will make sure that you do not fail to notify the authorities within 15 days.
De-registration:
If your UBO ever changes, you must notify the relevant authorities. We can help you through this process, ensuring that you deregister in accordance with the law.
Data Confidentiality:
The data submitted to the authorities in the registers is not disclosed to anyone. Being a professional and reputable agency, ebs can ensure that your data is kept safe (in accordance with the data confidentiality clauses of Cabinet Resolution 58/2020’s Article (15) clauses 1-2).
UBO
Templates
Cabinet Resolution No. (58) of 2020 Regulating the Beneficial Owner Procedures
UBO Declaration Form Template
Govt circular regarding UBO
FAQ’s
Ans: Any individual having the most amount of control along with a minimum of 25% shares/voting right in a company and who benefits the most from its business activities
Ans: An ultimate beneficial ownership register is basically a document prepared by a legal entity. This document must contain data about the UBO that has been requested under the clauses of Cabinet Resolution 58/2020.
Ans: No. A beneficial owner is someone who holds shares in a company. An Ultimate Beneficial Owner has ultimate control over a business owing to its 25% or larger shareholding. Their control can be through direct or indirect means. UBOs can be ordinary shareholders, but not all Beneficial Owners can have ultimate control over how a business can or should be.
Ans: An entity’s UBO can be identified by the following conditions of being a UBO outlined by the Cabinet Resolution 58/2020. Individuals who meet these requirements are identified as UBOs of the entity.
Ans: It is required by the law in most countries to identify UBOs. The purpose is to discourage financial mal-intent and encourage corporate transparency. It helps mitigate fraud, money laundering, and financial crimes.