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UBO Complaince

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Ultimate Beneficial Ownership UAE

On August 28, 2020, the UAE Cabinet passed Resolution 58, which replaced Resolution 34 on August 28th. This resolution aims to establish corporate transparency by regulating Ultimate Beneficial Owner Procedures. The resolution also contains recommendations on establishing a UBO for new companies and existing ones. The resolution covers all companies incorporated in the UAE mainland and free zones (with certain exceptions). This resolution emphasizes the need for establishing and maintaining an Ultimate Beneficial Ownership (UBO) register and supporting documentation. This register must be maintained at all times by businesses. They must also submit an update to the authorities and notify them of any changes in the register.

To minimize the possibilities of corporate monetary fraud, both state and federal governments made this announcement. Unregulated entities may engage in financial and economic crimes that pose a threat to a country’s business climate. A UBO eliminates this risk by forcing organizations and institutions to identify the party that will benefit from a legal entity’s activities.

All legal entities must quickly develop an understanding of all the requirements of resolution 58 and the filing processes, particularly because obtaining and maintaining a list of the beneficial owners has become a difficult duty. Let’s start by defining the phrase “ultimate beneficial owner.”

What is the meant by Ultimate Beneficial Owner?

A person or entity that has more than 25% of a firm’s shares and/or voting rights. It’s also the individual or entity that benefits from any corporate transactions. A company can have a direct or an indirect UBO. The Resolution (cabinet resolution 58) has made clear-cut application procedures that all relevant parties must adhere to.

UBO Identification

  1. The UBO is the individual who, directly or indirectly, owns and runs a firm, according to the resolution. A UBO is considered to be an individual who has the ability to dismiss and appoint a majority of a company’s directors. Individuals with control over at least 25% shares in a firm and the power to do so are called UBOS.
  2. If no natural individual fulfills the above criteria, the UBO should be someone who has control over a firm in some other manner.
  3. If no natural person can be found who satisfies the criteria outlined in points one through two, the UBO is deemed to be a person who has been designated to a higher management position within the firm.
  4. If the criteria for determining a UBO are met by more than one person (for example, 25% of voting rights are held by two people), all of them will be considered joint owners of the ratio.

Any sort of arrangement may be utilized to identify a firm’s UBO, according to the resolution. This implies that organizations may call on a variety of legal persons and/or third parties for assistance. A business must always keep an up-to-date record of the UBO’s information after it has been discovered.

Ultimate Beneficial Owner Vs Beneficial Owner

A Beneficial Owner is not the same as an UBO. People who are considered beneficial owners of a firm are referred to as shareholders. UBOs are people who control at least 25% of a firm’s equity. Furthermore, they have the power to influence a firm in a variety of ways, including through direct or indirect control. The UBOs have the ability to control the actions of entire organizations. It should go without saying that these people might have a lot of power.

Declaration

Now that we’ve covered what UBOs are and how Resolution 58’s rules the work, let’s look at what legal entities in the UAE need to do to comply with this legislation. The resolution has established a set of clear rules for companies to follow in order to report their UBO.

All corporations licensed in the UAE are required by the resolution to disclose their UBO. The following are the exceptions:

  • Licensed Free Zone’s legal entities(Dubai International Financial Center and Abu Dhabi Global Markets)
  • The Federal and Emirate governments own numerous corporations, which are referred to as legal entities

The resolution doesn’t require entities licensed by free zones to declare their UBO. However, many financial-free zones already have their own procedures for identifying and reporting UBOs. The basic conditions for qualifying as a UBO, as well as the reason for their identification, are identical to those in Resolution 58. However, each free zone has its own approach to this issue. For more information on how to make a UBO declaration in the free zones, contact your chosen free zone’s client service teams.

Legal Entity’s Responsibility

  • Companies must supply all required information exactly at the time of registration and licensing.
  • On all of their papers, companies should advertise their trade name and official address in the Emirates.
  • If there’s any question about who the real beneficiary is, the firm should notify all of its beneficial owners.
  • Companies must supply pertinent information about the UBO in the register once it has been identified and declared. The registrar must also ensure that the record is kept up to date. Any changes that a business is notified of should be changed in the register within 15 days after they were discovered.
  • Companies must submit all information about their UBO (and any other requirements of the resolution) within 60 days after cabinet resolution 58 is signed. To register and license a business, you must complete the process within 60 days of the company’s registration and license.
  • Provide details as directed by the registrar. The information must be provided to authorized personnel in the same manner.
  • The registrar must be notified of any changes made to the data supplied to the registrar within 15 days of making those modifications.

To comprehend the regulations and responsibilities of legal entities when it comes to UBO compliance, consider the Cabinet Resolution No. (58) of 2020, which regulates beneficial owner procedures.

If organizations don’t follow this rule, they will be penalized. The Ministry of Economy will take measures against them. Once these penalties have been imposed, the legal entity must submit an appeal, which will be handled before the sanctions may be discontinued.

Example

That person has the ultimate gain from a legal entity’s decisions, as we’ve shown. Let’s look at some UBO examples to help you understand the concept better.:

Example 1

ABC is an offshore firm with complete control over 123 FZ-LLC, a commercial entity located in the UAE’s free zone. Mr. A and Mr. C each own one share of ABC (50% each). The UBOs of the corporation are Mr. A and Mr. B, who are both shareholders. This does not, however, make them UBOs of ABC.

Example 2

Company XYZ is the parent company of five firms: A, B, C, D, E. Each of the five firms is controlled by a single person. John owns organization A, Adam owns organization B, Sam owns organization C, and Paul owns organization D and E. XYZ is owned by five firms, each of which owns half of the company. A, B, C, D, and E all represent 20% of XYZ’s total equity. Paul has a stake of 40 percent in XYZ since he owns companies D and E. This implies that Paul is the UBO of XYZ.

How to Prove the Ultimate Beneficial Owner?

The following approach should be used to determine and authenticate a company’s UBO:

  • To see whether a firm is legitimate and registered, get the credentials for the legal entity that it operates.
  • In order to figure out who owns a legal entity, collect data on the ownership chain of each individual who has direct or indirect control over the entity through shares or interests.
  • Examine the beneficiary owner’s share, percentage, and management control. This may assist you in identifying the people with the most authority over the firm.
  • Compare the ownership and control levels of each BO to the UBO identification conditions set out in resolution 58. The UBO will be the individual who satisfies the criteria.

Third-party assistance may make UBO verification more simple. Once a UBO has been discovered, a firm must gather the required information and compile the Register of Beneficial Ownership in order for it to be submitted to authorities.

Register

The procedure of identifying a UBO and then gathering information about them that is subsequently entered into the UBO register begins with a declaration. The following are required of legal persons under the resolution:

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

The Register of Beneficial Owners will contain up-to-date information regarding a company’s prominent UBO. The following information from the UBO must be recorded in the register:

  • Full name, address, place of birth, and nationality of the applicant
  • Residential address to which notices shall be delivered
  • The number on your work identification card or passport, where you were born, issuing country, and issue date and expiration date
  • The date on which the individual became the company’s UBO, as well as the basis on which he was selected
  • The date on which the company’s UBO stopped being the individual

In Cabinet Resolution 58/2020, you may find out exactly what information you’ll need to create the preceding documentation.

It’s not easy to acquire information on your UBO and then compile documentation for submission. A third party, such as BestaxCA, can make a significant difference. The BestaxCA is a Consultancy Agency that specializes in assisting businesses with government compliance.BestaxCA can assist you with:

  • Analyzing your ownership chain and validating UBOs is the first step
  • Assist you in gathering data for your UBO, Nominee Directors/Managers, Partners/Shareholders records, and compiling them. They can ensure that your paper adheres to the resolution’s standards to the letter
  • Assist you in organizing the filing procedure with the authorities
  • Help you to organize your registers and ensure that all information in them is up to date

Certificate

A UBO Certificate is given to legal persons who comply with the resolution. This shows that the firm has confirmed its UBO and keeps an up-to-date register of its UBO information.

If a firm ever has to deal with law enforcement in connection with financial malintent, a UBO Certificate may be quite beneficial. The Certificate is given by the Licensing Authority, which is in charge of the registration of firms in a state.

How can BestAxca assist?

BestaxCA can assist organizations to adhere to the agreement because it has the necessary expertise and understanding. It’s a delicate issue to verify and declare your UBO. Your facts must be accurate and trustworthy.

  • Current Status Summary: We have the resources and knowledge to offer you the appropriate assistance. They will assist you in collecting and verifying all of the necessary information with your authorities.
  • Help in Registration: After collecting the necessary information, they may organize and compile it according to the regulations. They ensure that your registration form is free of mistakes and in accordance with the resolution.
  • Deliver Continuous Support: During the registration procedure, businesses usually need to submit additional information as needed. We can quickly and accurately generate any additional data you may desire.
  • Frequent Review: Any changes to the data submitted by entities in their registers must be reported to the authorities. We can keep track of all changes to your data and react immediately if a new update is required by the authorities. They can ensure that you notify the authorities within 15 days.
  • Deregistration: If your UBO changes, you must notify the proper authorities. We can assist you in this process, ensuring that you de-register in accordance with the law.
  • Confidentiality Of Personal Data: The data recorded in the registers is not made public to anyone. BestaxCA, as a professional and reputable organization, can guarantee that your data is kept secure (in accordance with Cabinet Resolution 58/2020’s Article (15) clauses 1-2).

Professional assistance from a third party may make the UBO registration process more manageable for your firm. It will also ensure that you fulfill all criteria on time and without problems.

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