In recent years, the UAE government has implemented increasingly effective measures to combat money laundering and terrorist financing activities. A significant step in this direction was Cabinet Decision No. 58 in 2020, specifically addressing the Regulation of the Procedures of the Real Beneficiary. This decision stipulates that companies registered in the UAE, whether in free zones or the mainland, are obligated to maintain a register of the Ultimate Beneficial Owner (UBO) and submit it to the relevant authorities. This requirement is now an integral part of the license application procedure or the company incorporation process, whether in the mainland or free zones.
The primary aim of this regulation is to enhance transparency in the UAE economic framework by imposing more stringent disclosure and record-keeping requirements on companies. The regulations pertaining to the Ultimate Beneficial Owner (UBO) in Dubai are designed to ensure that companies give due consideration to their ownership structure, thereby avoiding any non-compliance with anti-money laundering and anti-terrorism financing laws.
In brief, the ultimate beneficial owner (UBO) is the individual who ultimately receives the benefits from a company. To illustrate, if an individual holds significant shares in Company X, and Company X, in turn, holds substantial shares in Company Y, that individual would be considered the UBO of Company Y (unless the ownership is through an indirect arrangement). The UBO regulations establish a clear line of ownership or influence from one company to another
In reality, a company may have numerous intricate layers of ownership, requiring careful unraveling to precisely identify the UBO. Unless exempted, as a UAE business owner, it is mandatory to compile a register of beneficial owners for your company and submit it to the authorities. Failure to do so may result in penalties, emphasizing the importance of prompt action
The Resolution mandates that entities licensed in the UAE (unless exemptions apply) must create and submit an Ultimate Beneficial Owner ("UBO") register, Nominee Director register (if applicable), and a Partners or Shareholders register to the relevant authority within sixty (60) days from the effective date of the Resolution, which is 27 October 2020, or by the establishment date of the entity. While specific Free Zones have already instituted rules and procedures for UBO data filing, additional guidance from several other Free Zone authorities and the Department of Economic Development (for onshore entities) is anticipated regarding the filing mechanisms.
An Ultimate Beneficial Owner (UBO) is an individual who receives the maximum benefit from a financial transaction, surpassing the benefits enjoyed by a Beneficial Owner (BO).
In straightforward terms, a UBO enjoys the utmost benefits and advantages, irrespective of the chain of control, while a beneficial owner is an individual who reaps ownership benefits despite the property title being held in another name. UBOs may at times obscure their identities and could be less conspicuous than general BOs, such as shareholders, guardians of minors, individuals with power of attorney, or even nominee directors who directly or indirectly receive substantial benefits or profits. In the context of beneficial ownership, the term includes a 'natural' owner rather than a member or shareholder, establishing ownership or control within a legal entity or arrangement
The UBO Register is required to contain information about the company's "Real Beneficiaries," as per the definition in the UBO Law. Real Beneficiaries are natural persons who, either directly or indirectly, possess a minimum of 25% of the company's share capital, or those who hold at least 25% of the voting rights, or those who control the company through means, such as having the right to appoint or dismiss a majority of the directors or managers.
Companies that are listed on regulated stock exchanges and their subsidiaries are not required to submit separate registers containing information about the Ultimate Beneficial Owner to the Registrar. The disclosures they make to the relevant stock exchanges will serve as the required submission. Additionally, companies wholly owned by a local or federal government body or established in the DIFC or ADGM financial free zones are also exempt, as they are subject to their own UBO disclosure requirements.
Failure by companies to comply with any obligations outlined in the UBO Law may result in various penalties for both the company and its officers. In certain instances, beneficiaries and shareholders may also face penalties.
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The UBO is crucial in the UAE as part of regulatory efforts to combat money laundering and terrorist financing. The government mandates entities to maintain a register of UBOs to enhance transparency and enforce stringent disclosure and record-keeping requirements.
An Ultimate Beneficial Owner (UBO) is an individual who receives the maximum benefits from a financial transaction, surpassing those enjoyed by a Beneficial Owner (BO). The UBO enjoys utmost benefits irrespective of the chain of control, whereas a BO reaps ownership benefits despite the property title being held in another name.
The UBO Register is mandated by the UBO Law and is required to contain information about the company's "Real Beneficiaries." These beneficiaries are natural persons who directly or indirectly possess a minimum of 25% of the company's share capital, hold at least 25% of the voting rights, or control the company through means such as appointing or dismissing a majority of directors or managers.
Yes, exemptions apply to companies listed on regulated stock exchanges and their subsidiaries, as well as companies wholly owned by a local or federal government body or established in the DIFC or ADGM financial free zones. Such entities are subject to their own UBO disclosure requirements and are not required to submit separate registers to the Registrar.
Companies failing to comply with obligations outlined in the UBO Law may face penalties, including fines. In some cases, company officers, beneficiaries, and shareholders may also be penalized for non-compliance. It is crucial for businesses to adhere to these regulations to avoid legal consequences.
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