The UAE government has introduced a major change in regulations which concerns Ultimate Beneficial Owner (UBO), the Cabinet of UAE has issued Cabinet Resolution no (58) of 2020, came into action on 28th August 2020, which states the regulations of real beneficiary procedures (UBO Regulations).
All the Legal entities registered under UAE Mainland or Free Zones will get affected by this regulation. As it’s mandatory for all the entities to register under UBO and should report directly to authority for the registration of the company under the new regulation.
Government of UAE has declared this regulation to decrease the chances of monetary fraud at a corporate level. They want to sweep away the unregulated entities who are involved in financial and economic crimes which can be very harmful for the country’s business environment. Hence, UBO is for identifying the party that will be ultimately benefiting from the actions of a legal entity in UAE.
The purpose of the UBO registration: –
The natural person who ultimately own or control or have the right to vote with minimum 25% shareholding of the company, whether through direct or indirect ownership or holds the rights to dismiss the directors/ managers of the company. In case if there’s no natural person, then the rights automatically move to a person who holds the right over the company through other means, is bound to register as a UBO.
HOW TO IDENTIFY UBO?
- According to the Resolution passed by the UAE Cabinet, UBO is a person who directly or indirectly owns and controls a company.
- – 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
- 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.
- If no natural person identified via conditions mentioned in (1) and (2), a person appointed by higher management shall be considered as a UBO
- If any of the conditions specified above are satisfied by one or more persons, then everyone shall be considered as UBO
UBO and beneficial Owner will always be different. As 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
- It’s expected by all the legal entities to provide the details correctly while registration.
- Trade names and official address of the companies must be shared 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 A UBO?
For verifying a UBO, the following steps shall be taken:
- Legal entities certification has to be checked to verify the company’s registration.
- To determine the people who has direct or indirect ownership in the entity through shares or interests, legal entity’s ownership chain data is required.
- The control of all beneficiary owners could be revealed by comparing the ownership share, share percentage, and management control.
- 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.
The resolution requires legal entities to produce and maintain the following:
- Register of Beneficial Owner
- Nominee Board Member information
- Register of Partners or Shareholders
The Data which is required to be registered under this UBO regulation –
- Full name, place and date of birth, and nationality
- Residential address(es)
- ID card or passport number, issuing country, and the issue date and expiry date
- The date and the basis on which the individual became the company’s UBO.
- The date on which the individual stopped being the company’s UBO.
After the successful registration under this new regulation, company will receive a UBO Certificate. The certificate of UBO is issued by the License Authority that is in charge of the companies registered in the UAE. The certificate represents as a proof to a company which has verified its UBO.
Registration of a legal entities can be a tedious task, but don’t worry, professionals like Prime Global Business Services can make the UBO registration process easier for your company. We can ensure you to give you the hassle-free services to meet your top to end requirements. Call us on +971 52 1054028 or message us on Whatsapp on +971 52 1054028. You can also drop us an email at firstname.lastname@example.org.