Ultimate Beneficial Ownership (UBO)
On 28 August 2020, the UAE government issued Cabinet Resolution No. 58, replacing the earlier Cabinet Resolution No. 34. This new resolution aims to regulate procedures related to Ultimate Beneficial Ownership (UBO) in order to enhance corporate transparency. It provides clear guidelines on UBO requirements for both newly established and existing companies. The resolution applies to all legal entities registered in the UAE mainland and free zones, with certain specified exceptions.
A key provision of Cabinet Resolution No. 58 is the mandatory preparation and maintenance of an Ultimate Beneficial Ownership (UBO) register, along with supporting documentation. Entities are required to keep this register readily available at their principal place of business and submit it to the relevant authorities. Additionally, any changes to the register must be promptly reported.
The primary objective of this declaration is to reduce the risk of corporate-level financial fraud. Unregulated entities pose a threat of engaging in financial and economic crimes, which can negatively impact a country’s business environment. UBO regulations help mitigate this risk by ensuring that entities disclose the individuals who ultimately benefit from the operations of a legal entity.
As maintaining and filing a UBO register has become a legal obligation, all affected legal entities must promptly familiarize themselves with the requirements outlined in Resolution No. 58 and ensure full compliance with the filing procedures.
How is an Ultimate Beneficial Owner (UBO) defined?
A Ultimate Beneficial Owner (UBO) is a person or entity that owns or controls more than 25% of a company’s shares or voting rights. This individual or party ultimately benefits from the transactions carried out by the company. Ownership or control may be held directly or indirectly. Cabinet Resolution No. 58 provides clear and specific guidelines for identifying and maintaining UBO records, which must be followed by all applicable entities.
UBO Identification
According to Cabinet Resolution No. 58, a Ultimate Beneficial Owner (UBO) is defined as the individual who ultimately owns or controls a company, either directly or indirectly.
A person holding 25% or more of the company’s shares or voting rights, or having the authority to appoint or remove the majority of the directors, qualifies as a UBO.
If no natural person meets the above criteria, the UBO shall be the individual who exercises control over the company through other means.
In the absence of any person meeting the previous conditions, the individual holding a senior management position in the company will be considered the UBO.
If the qualifying conditions are shared among multiple individuals (e.g., two persons each holding 25% of voting rights), all such individuals shall be recognized as joint UBOs in proportion to their rights.
The resolution also clarifies that any form of arrangement can be considered valid in determining a company’s UBO. This allows companies to engage multiple legal entities or third parties when necessary.
The resolution further clarifies that any form of arrangement may be accepted for the purpose of identifying a company’s UBO. This allows companies to involve multiple legal entities or third parties when necessary to determine ultimate ownership or control. Once a UBO has been identified, the company is required to maintain an accurate and up-to-date record of the UBO’s information at all times.
Understanding the Difference: UBO vs. Beneficial Owner
A Ultimate Beneficial Owner (UBO) is distinct from a beneficial owner. While beneficial owners are individuals who hold shares in a company, UBOs are those who own at least 25% of a company’s shares and also have the ability to exert control over the company, either directly or indirectly. UBOs often possess significant influence over the company’s decisions and operations. As such, they can wield substantial power within an organization.
Declaration
Now that we have a clear understanding of UBOs and the regulations outlined in Cabinet Resolution No. 58, let’s explore what legal entities in the UAE must do to comply with the law. The resolution provides a comprehensive set of guidelines to assist entities in properly declaring their Ultimate Beneficial Owners (UBOs).
As per the resolution, all legal entities licensed in the UAE are required to declare their UBOs. However, the following are exempt from this requirement:
Entities licensed in financial free zones, such as the Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM)
Entities directly or indirectly owned by the Federal or Emirate governments
Although entities in these financial free zones are not governed by Resolution 58 in this regard, most free zones have their own systems and procedures in place for UBO identification and declaration. While the criteria for identifying a UBO generally align with those of Resolution 58, each free zone follows its own processes.
To understand the specific requirements for UBO declaration within a free zone, it is recommended to contact the respective free zone’s client relations team for detailed guidance.
Legal Obligations for Entities Regarding UBO Compliance
At the time of registration and licensing, companies are required to provide all necessary information accurately and in full.
Companies must ensure that their trade name and official address within the UAE are clearly stated on all official documents.
In cases where there is uncertainty about the true beneficial owner, the company must notify all individuals who may qualify as beneficial owners.
Once the UBO has been identified and declared, the company must record the relevant details in the UBO register and ensure it remains updated. Any changes must be reflected in the register within 15 days of becoming aware of them.
Companies are required to submit all UBO-related data (and other relevant information as per the resolution) within 60 days of the enactment of Cabinet Resolution No. 58 or within 60 days of completing their registration and licensing, whichever is applicable.
All required information must be submitted to the registrar and also made available to authorized personnel upon request.
- Any updates or amendments to the information previously submitted to the registrar must be reported within 15 days of making the change.
Refer to Cabinet Resolution No. (58) of 2020 on Regulating the Beneficial Owner Procedures to fully understand the requirements and obligations of legal entities concerning UBO compliance.
Non-compliance with the resolution may lead to penalties and sanctions imposed by the Ministry of Economy. In such cases, the legal entity will be required to submit an appeal, which will be reviewed before any sanction can be lifted.
Example
As we’ve established, a UBO (Ultimate Beneficial Owner) is an individual who ultimately benefits from the decisions and activities of a legal entity. The following examples help illustrate how UBOs are identified:
Example 1
ABC, an overseas company, holds 100% ownership of 123 FZ-LLC, a free zone company in the UAE. The shares of ABC are equally owned by Mr. A and Mr. B, each holding 50%.
As a result, Mr. A and Mr. B are the UBOs of 123 FZ-LLC, because they ultimately control it through their ownership of ABC.
However, it is important to note that this does not make them UBOs of ABC itself—they are simply its shareholders.
Example 2
XYZ Group is the parent company of five subsidiaries: A, B, C, D, and E. Each subsidiary is fully owned by an individual:
John owns Company A
Adam owns Company B
Sam owns Company C
Paul owns Companies D and E
XYZ Group’s ownership is equally divided among these five companies—each holding 20% of XYZ. Since Paul owns both D and E, he controls 40% of XYZ Group.
Therefore, Paul is considered the UBO of XYZ Group, as he ultimately holds more than 25% of its ownership through indirect means.
How to Verify the Identity of an Ultimate Beneficial Owner (UBO)?
To accurately identify and verify the Ultimate Beneficial Owner of a legal entity, follow these key steps:
Obtain the Legal Entity’s Credentials
Begin by verifying whether the company is officially registered and legitimate by reviewing its incorporation documents and trade license.Review the Ownership Structure
Collect data on the company’s ownership chain, identifying individuals or entities with direct or indirect ownership through shares, voting rights, or financial interests.Assess Ownership and Control
Analyze the ownership percentages and level of control held by each beneficial owner. This includes looking at their shareholding, voting rights, and ability to influence management decisions.Apply UBO Identification Criteria
Match the information gathered against the UBO identification conditions stated in Cabinet Resolution No. 58 of 2020. Individuals who own or control 25% or more of the entity, either directly or indirectly, typically qualify as UBOs.Seek Expert Assistance if Needed
Engaging third-party professionals or compliance consultants can simplify the verification process and ensure accuracy in complex ownership structures.Maintain a Register of Beneficial Owners
Once the UBO is identified, compile and maintain the Register of Beneficial Owners (RBO) with all required details. This register must be kept up to date and submitted to the relevant authorities as per regulatory requirements.
What Information Is Required to Maintain a Register of Beneficial Owners?
While specific requirements may vary depending on the licensing authority, the Register of Beneficial Owners (RBO) must generally contain the following details for each Beneficial Owner:
- Full Name
- Nationality
- Date and Place of Birth
- Passport or Identity Card Details
- Number
- Place of issuance
- Issue date and expiry date
- Residential Address or an address where official notices can be delivered
- Email Address and Contact Number
- Number of Shares Held and their Nominal Value
- Date on Which the Individual Became a Beneficial Owner
- Date of Cessation, if the person ceased to be a Beneficial Owner
What Are the Required Details for the Register of Shareholders or Partners?
| Information to Be Maintained for Individual Shareholders | Details Required for Corporate Shareholders |
|---|---|
|
|
Register
UBO Declaration Process
The UBO declaration process requires identifying the Ultimate Beneficial Owner (UBO) of a legal entity, collecting the relevant information, and recording it in an official register. As per Cabinet Resolution No. 58 of 2020, all applicable legal entities must prepare, maintain, and update the following records:
Register of Beneficial Owners
Details of Nominee Board Members
Register of Partners or Shareholders
Register of Beneficial Owner – Required Information
The Register of Beneficial Owner must include accurate and up-to-date details of the identified UBO. The following information should be recorded:
Full name, place and date of birth, and nationality
Residential address(es) where official communications may be sent
Passport or ID number, issuing country, issue and expiry dates
Date and basis of acquiring UBO status in the entity
Date on which the individual ceased to be the UBO, if applicable
Entities must ensure that these records are updated regularly and submitted to the appropriate licensing authority. For comprehensive guidance on the declaration process and documentation requirements, refer to Cabinet Resolution No. 58 of 2020.
Expert Support with UBO Compliance
Gathering information about your Ultimate Beneficial Owner (UBO) and compiling the required documentation for submission is a detailed and sensitive process. Seeking expert assistance from a professional consultancy like Earnest Consultants can make the entire procedure more efficient and compliant.
Earnest Consultants specializes in guiding businesses through the complexities of governmental compliance. Their team can assist you with:
Analyzing your ownership structure to accurately identify and verify UBOs
Compiling data for UBOs, Nominee Directors/Managers, and Partners/Shareholders registers
Ensuring that all documentation strictly adheres to the guidelines of Cabinet Resolution No. 58 of 2020
Coordinating the filing process with the relevant authorities
Maintaining your registers and keeping all records up to date as required by law
UBO Certificate
Upon successful compliance with the resolution, legal entities are issued a UBO Certificate. This certificate serves as official proof that:
The company has identified and verified its Ultimate Beneficial Owner
A register is maintained with complete and updated UBO data
This certificate is issued by the Licensing Authority responsible for the company’s registration in the UAE. Possessing a UBO Certificate can be especially important in demonstrating transparency and lawful operation if the company ever faces legal or regulatory scrutiny.
Submit Your UBO Through the Following Platforms
| Sr. No | Licensing | Mode of Submission | Portal, Link, or Email |
|---|---|---|---|
| 1 | Dubai Silicon Oasis | Email to DSOA Licensing | Lic_section@dso.ae |
| 2 | Hamriyah Free Zone | Via e-portal | HFZA Portal |
| 3 | Ajman Free Zone | Via e-portal | Ajman Free Zone Portal: Services- Company Services – Ultimate Beneficial Owner AFZ Portal |
| 4 | Dubai DED | Service Centers | DED Portal |
| 5 | Fujairah Creative City | ubo@ccfz.ae ccfz@creativezone.ae | |
| 6 | SAIF Zone | Via e-portal | SAIF Zone Portal |
| 7 | Ras Al Khaimah Economy Zone (RAKEZ) | Via e-portal | RAKEZ |
| 8 | Dubai Development Authority (DDA) | Via e-portal | DDA |
| 9 | Um AlQuwain Free Trade Zone | Portal | UBO Um AlQuwain Free Trade Zone |
| 10 | Dubai Multi Commodities Centre | Via e-Portal | UBO Um DMCC Form |
| 11 | Media Zone Authority (MZA) | Via e-Portal | UBO Um DMCC Form |
| 12 | Dubai Aviation City Corporation (DACC) | license@dacc.ae | |
| 13 | JAFZA | Via e-portal | JAFZA UBO |
DED Regulations:
Licensing Authority Requirements and UBO Submission Updates
It is important to note that each Licensing Authority has its own standardized set of requirements for UBO submissions.
For instance, the Department of Economic Development (DED Dubai) has issued a specific form for submitting UBO details. However, instead of allowing online submissions, DED Dubai has instructed its customers via separate communication to submit the form and supporting documents physically at its service centers. No specific deadline has been announced for the submission. Additionally, when contacted by phone, DED clarified that only entities with corporate shareholders as their “Beneficial Owners” are required to file UBO details. Legal entities that are directly owned by individuals are currently exempt from this filing.
JAFZA Regulations:
On the other hand, JAFZA initially required entities to file UBO details by December 31, 2020. As of the time of writing, JAFZA has withdrawn the “Beneficial Owner” form from the Dubai Trade Portal and has indicated that they are upgrading the service. A new deadline and further instructions are expected to be announced.
Under the previous guidelines, all legal entities — whether owned by individuals or corporates — were required to file UBO details through the Dubai Trade Portal (http://eservices.dubaitrade.ae). While the earlier instructions did not explicitly mention the need to submit supporting documents, they did specify that relevant documentation and records must be made available upon request.
JAFZA Regulations
The JAFZA Beneficial Owner form was more comprehensive and also incorporated elements related to Economic Substance Regulations (ESR). The form was divided into five sections:
Company Details
Section A: Ownership and Control Arrangements
Section B: Business Model
Section C: General (Financial Information)
Section D: General (Bank Details)
Upon telephonic inquiry, it was confirmed that a legal entity is required to submit a notarized and attested copy of an official document issued by the registrar, confirming the company’s ultimate beneficial owner. If attestation requires additional time, a standard copy can initially be submitted, provided it is accompanied by a letter from the registered agent confirming that the attested original will be submitted once ready.
We are currently awaiting the reactivation of the JAFZA portal for filing Ultimate Beneficial Owner (UBO) details.
DAFZA Regulations
DAFZA (Dubai Airport Free Zone Authority) had set a deadline of 28 December 2020 for the submission of Beneficial Owner details. The authority has outlined specific exemptions under the UBO Regulations for entities whose shares, or whose ultimate holding company’s shares, are listed on recognized UAE or foreign stock exchanges—such as the London Stock Exchange (LSE) or New York Stock Exchange (NYSE)—which are subject to transparency and disclosure regulations.
DAFZA requires the submission of the Beneficial Owner form along with supporting documents through its CRM Portal:
Login → Services → Licensing Services → UBO, Shareholders, Directors, Managers & Officers Declaration Forms.
DAFZA has also stipulated that all supporting documents required under the regulations must be made available within three business days upon request for inspection.
Way Forward: Compliance with Beneficial Owner Procedures
It is important to understand that submitting UBO forms to the respective licensing authorities is only one part of the compliance process under the UAE’s Beneficial Owner Procedures Regulation.
As per Article 6 of the Regulation, every legal person must maintain and regularly update the following registers:
Beneficial Owner Register
Nominee Directors/Managers Register
Shareholders Register
Additionally, it is advisable to formally notify each Beneficial Owner and retain written confirmation, particularly when the details have not been provided directly by the Beneficial Owner.
Earnest Consultants: Your Trusted Partner in UBO Compliance
Earnest Consultants has the experience and expertise necessary to assist entities in complying with UBO regulations. Verifying and declaring your Ultimate Beneficial Owner (UBO) is a sensitive and critical task. The information collected and submitted must be accurate, complete, and dependable.
Current Status Overview
We have the qualified professionals and resources to guide you effectively through the UBO compliance process. Our team will assist in collecting and verifying all the initial information required for registration with the relevant authorities.
Assistance in Registration
Once the data is collected, we help organize and compile it in line with the guidelines issued by the licensing authorities. We ensure that your submission is accurate, error-free, and fully compliant with applicable regulations.
Ongoing Support
Throughout the registration process, authorities may request additional documentation or clarifications. Earnest Consultant provides responsive support to prepare and present any further data promptly and accurately.
Regular Review and Updates
UBO regulations require entities to notify authorities of any changes in the registered data. We monitor your records and assist in submitting timely updates, ensuring compliance with the 15-day notification requirement.
Deregistration Support
If there is a change in your UBO, the deregistration and re-declaration process must be handled carefully. We can guide you through this process, ensuring all actions are taken in line with legal requirements.
Data Confidentiality
All data submitted to the authorities remains confidential and is not disclosed to third parties. As a professional and trusted agency, Earnest Consultants ensures your sensitive information is securely managed in accordance with the confidentiality provisions outlined in Cabinet Resolution No. 58 of 2020, Article 15 (Clauses 1 and 2).
