1. What is a Beneficial Owner (BO)?
   A Beneficial Owner (BO) is the natural person who ultimately owns or controls a legal person (company) directly or indirectly. Control can be through ownership of at least 25% of the company’s shares, voting rights, or the ability to appoint or dismiss the majority of its directors. The BO may also be the person on whose behalf transactions are carried out or who exercises control over the company through indirect means, such as a chain of ownership.

2. Who needs to declare a UBO in the UAE?
   All legal persons (companies) licensed or registered in the UAE, including those in commercial free zones, must declare their Beneficial Owners, except for entities wholly owned by the federal or local government or government-controlled companies. Companies in financial free zones (like DIFC and ADGM) are also exempt from UBO regulations.

3. Why is identifying a Beneficial Owner required?
   Identifying a Beneficial Owner is required to promote transparency and help combat money laundering, terrorism financing, and other illegal financial activities. The declaration is also important for adhering to international standards set by organizations like the Financial Action Task Force (FATF).

4. What law regulates UBO declaration in the UAE?
   UBO declaration in the UAE is regulated by Cabinet Decision No. (109) of 2023, which outlines the procedures and requirements for declaring the Beneficial Owner and the consequences for non-compliance.

5. What is the minimum ownership percentage to be classified as a UBO?
   To be classified as a Beneficial Owner, a person must own or control 25% or more of the shares or voting rights of a legal person. This ownership can be direct (in their own name) or indirect (through other entities or individuals).

6. Are Free Zone companies subject to UBO requirements?
   Yes, Free Zone companies (commercial free zones) are subject to UBO regulations unless they are fully owned by the UAE government or are located in financial free zones such as Dubai International Financial Centre (DIFC) or Abu Dhabi Global Market (ADGM).

7. What is the role of the Ministry of Economy in UBO compliance?
   The Ministry of Economy is responsible for overseeing compliance with UBO regulations. It ensures that companies register their Beneficial Owners correctly, maintain accurate and updated information, and comply with the reporting obligations. The Ministry also collaborates with other governmental bodies for UBO-related investigations and international data sharing.

8. What information must be provided about the UBO?
   The company must provide the following details about the UBO:

   • Full name, nationality, and date and place of birth.

   • Residential address and contact details.

   • A valid copy of their identity card or passport (including issuing country, date of issue, and expiry).

   • The date on which the person became a UBO.

   • The date on which the peron ceased to be a UBO

   • The nature of the UBO’s ownership or control, such as their shareholding percentage, voting rights, or influence over company decisions.

9. Can there be more than one UBO for a company?
   Yes, a company can have multiple Beneficial Owners if more than one person meets the 25% ownership or control threshold. In such cases, all qualifying individuals must be declared as Beneficial Owners, and the details of each UBO must be recorded in the company’s Beneficial Owner Register.

10. Is the UBO information confidential?
    Yes, UBO information is confidential and cannot be disclosed publicly without the UBO’s written consent. However, it must be shared with relevant regulatory authorities upon request, particularly for law enforcement or compliance with international agreements related to anti-money laundering (AML) and combating terrorism financing.

11. What happens if a UBO refuses to provide their details?
    If a UBO refuses to provide their details, the company is obligated to notify them in writing, specifying the need to complete the Beneficial Owner's Register. If the UBO does not respond within 15 days, the company must record any available information in the register. The company must report the situation to the Registrar, who may impose penalties if the information is not adequately provided or updated.

12. Can a company with a UBO listed on a stock exchange be exempt from UBO regulations?
    Yes, companies listed on regulated stock exchanges are generally exempt from providing UBO information because they already adhere to strict disclosure and transparency rules imposed by the stock exchange and securities regulators. However, subsidiaries of listed companies may still need to comply with UBO regulations unless they are wholly owned by the listed parent company.

13. What is considered reasonable measures to identify a UBO?
    Reasonable measures to identify a UBO include conducting thorough due diligence on the company’s ownership structure, verifying the authenticity of provided documents, and investigating any entities or arrangements that may be used to obscure the true ownership. Companies must take active steps to obtain accurate information and cannot rely solely on verbal declarations from shareholders or directors. If the UBO cannot be identified after all reasonable measures have been exhausted, the highest-ranking management official must be recorded as the UBO.

14. Are foreign legal entities registered in the UAE subject to UBO regulations?
    Yes, foreign legal entities operating in the UAE must comply with UBO regulations unless they are specifically exempt. This includes providing details of their UBOs to the UAE Registrar. Exemptions may apply to companies wholly owned by foreign governments or those listed on a regulated stock exchange, but the general rule is that all companies, including foreign-owned ones, must declare their UBOs.

15. What is the process for correcting UBO records with the Registrar?
    If incorrect UBO information is found, any party with a legitimate interest (such as the company itself, shareholders, or regulatory authorities) can submit a request to the Registrar to correct the records. The company must take action to rectify the information within 15 days of becoming aware of the error. The updated information must be provided to the Registrar, who will amend the Register of Beneficial Owners accordingly.

16. What are the penalties for repeated violations of UBO regulations?
    Repeated violations of UBO regulations can result in escalating penalties. For example, a second violation may result in fines of AED 20,000 to AED 50,000, depending on the nature of the violation. If violations continue, fines can reach up to AED 100,000, and the company’s commercial license may be suspended until compliance is achieved. Additional penalties can include the closure of business premises if the violations are not corrected.

17. How should complex ownership structures be disclosed in UBO declarations?
    Companies with complex ownership structures must disclose all layers of ownership, including any holding companies, trusts, or partnerships involved. Each entity in the ownership chain must be clearly identified, along with the natural persons who exercise ultimate control. This is to ensure that the UBO is accurately identified, even if they are several layers removed from the legal person itself. Failure to disclose complex ownership structures can result in significant fines.

18. What actions can the Registrar take if a company fails to provide requested UBO information?
    If a company fails to provide the requested UBO information within the specified time (usually 15 days from receiving a request), the Registrar can issue a written warning. If the company continues to ignore the request, fines starting from AED 15,000 can be imposed, and the company’s license may be suspended until compliance is achieved. In severe cases, the Registrar can take legal action to compel the company to comply.

19. How long must UBO records be kept by a company?
    UBO records must be kept by the company for at least five years after the Beneficial Owner ceases to be associated with the company. In cases where the company is dissolved or liquidated, the liquidator must ensure that the UBO records are preserved for five years after the company’s dissolution.

20. What should a company do if it is unable to identify a UBO?
    If a company is unable to identify a UBO after taking all reasonable measures, it must record the Senior Management Official as the UBO in its Register of Beneficial Owners. This ensures that there is always a person responsible for the company’s compliance. The company must document the steps it took to try and identify the UBO, in case of a future audit or inquiry by the Registrar.

21. What are bearer shares, and why are they prohibited in UBO compliance?
    Bearer shares are shares whose ownership is determined by physical possession of the share certificates, rather than being registered to a specific owner. These shares are prohibited under UBO regulations because they make it difficult to identify the true owner of the company. Companies in the UAE are not allowed to issue bearer shares, and any shares must be registered to specific owners with clear documentation of ownership.

22. How are nominee shareholders handled under UBO regulations?
    Nominee shareholders are individuals or entities that hold shares on behalf of another person. Under UBO regulations, the details of both the nominee and the person or entity they represent must be recorded in the company’s Register of Beneficial Owners. This ensures transparency and prevents the use of nominees to obscure the true ownership of a company.

23. What happens if a company fails to provide additional data requested by the Registrar?
    If the Registrar requests additional data related to the UBO or ownership structure and the company fails to comply within 14 days, a written warning will be issued. If the company still does not provide the requested information, it can face fines starting from AED 15,000, with penalties increasing for subsequent violations. Continued failure to comply can result in license suspension and other enforcement actions.

24. How does UBO regulation apply to complex cross-border ownership structures?
    For companies with cross-border ownership, the UBO regulations still apply. The company must trace ownership through all entities, regardless of jurisdiction, until it identifies the natural person(s) who ultimately controls the company. This may involve working with foreign entities or regulators to obtain the necessary documentation. Failure to disclose cross-border ownership structures accurately can result in severe penalties.

25. How are administrative penalties collected for UBO violations?
    Administrative penalties are collected by the government authority responsible for enforcing UBO compliance, often through the Ministry of Finance. Penalties may be paid directly by the company, and failure to pay can result in additional fines, legal action, or suspension of the company’s license. The Ministry of Finance coordinates the distribution of penalty proceeds between federal and local governments, depending on the nature of the violation.

25. What happens if a company does not have a UBO?
    If a company cannot identify a UBO, despite exhausting all reasonable measures, the highest-ranking management official, such as the CEO or Managing Director, must be listed as the Beneficial Owner. This ensures that a responsible person is always accountable for the company’s activities.

26. What is a Nominee Board Member?
    A Nominee Board Member is a person appointed to the board of a company but who acts on behalf of another individual or entity. The Nominee follows the instructions of the actual owner rather than acting independently. Nominee Board Members must declare their status to the company, and their details must be recorded in the Register of Beneficial Owners.

27. What is the role of the Nominee Director in UBO compliance?
    A Nominee Director is required to declare their nominee status to the company and provide all relevant information, including the person or entity they represent. This information must be recorded in the company’s Register of Beneficial Owners. Nominee Directors must also inform the company of any changes to their status or details within 15 days. Failure to do so can result in fines or penalties for non-compliance.

28. What are the reporting obligations for liquidators?
    If a company enters liquidation, the appointed liquidator must provide the Registrar with a copy of the company’s Register of Beneficial Owners and the Register of Partners or Shareholders within 30 days of their appointment. The liquidator must also ensure that these records are preserved for a minimum of five years after the company’s dissolution or liquidation.

29. What are the consequences of failing to register UBO details?
    Companies that fail to register their UBO details are subject to penalties. The first violation usually results in a written warning, giving the company a specified time (often 15-30 days) to rectify the violation. If the company does not comply within this period, fines starting from AED 20,000 can be imposed. Repeated non-compliance may result in fines up to AED 100,000 and suspension of the company’s license until the violation is corrected.

30. Can a company be exempt from UBO regulations?
    Yes, certain companies are exempt from UBO regulations, including those:

    • Wholly owned by the federal or local government.

    • Fully owned by government-controlled companies.

    • Registered in financial free zones, such as DIFC and ADGM. Additionally, companies listed on stock exchanges are exempt as they already comply with strict disclosure requirements.

31. What is considered indirect control of a company?
    Indirect control refers to a situation where a person exercises control over a company through intermediaries, such as holding companies, trusts, or chains of ownership. For example, if a person controls a company that owns shares in another company, they are considered to have indirect control over the second company. This type of control must be declared as part of the UBO reporting.

32. How often should UBO information be updated?
    UBO information must be updated within 15 days of any changes. This includes changes in ownership, control, or any other circumstances affecting the status of the UBO. Companies must ensure that the information in their UBO register is accurate and up to date to avoid penalties for non-compliance.

33. What is a Register of Beneficial Owners?
    The Register of Beneficial Owners is a mandatory document maintained by the company, containing detailed information about all its UBOs. This register must be created within 60 days of the company’s incorporation or from the date a new UBO is identified. The register should include the UBO’s personal details, the nature of their control, and the date they became a UBO. The information in this register must be provided to the Registrar and updated whenever changes occur.

34. What penalties apply for not maintaining the Register of Beneficial Owners?
    Companies that fail to maintain an up-to-date Register of Beneficial Owners face penalties, starting with a written warning. If the violation is not corrected within the prescribed time, the company may face fines of AED 50,000 for the first offense, increasing to AED 100,000 for repeated violations. The company’s license may also be suspended until compliance is achieved.

35. What should a company do if UBO details are incorrect?
    If UBO details are found to be incorrect, the company must update the Register of Beneficial Owners within 15 days of becoming aware of the error. The correct information must be reported to the Registrar, and the UBO must be notified of any changes. Failure to update incorrect information can result in significant penalties.

36. What are complex ownership structures?
    Complex ownership structures involve multiple layers of ownership through different legal entities or arrangements designed to obscure the identity of the true owner. These structures are often used to conceal control or ownership for tax or legal purposes. Companies with complex ownership structures are subject to enhanced scrutiny, and they must disclose all layers of ownership to ensure compliance with UBO regulations.

37. What steps must be taken if the Beneficial Owner is changed?
    If there is a change in the Beneficial Owner (e.g., through the transfer of shares or a change in control), the company must update the Register of Beneficial Owners within 15 days of becoming aware of the change. The new UBO’s details must be recorded, and the former UBO’s information should be removed or marked as no longer applicable. The updated register must then be submitted to the Registrar.

38. What constitutes indirect control of a company under UBO regulations?
    Indirect control occurs when a person does not directly hold shares or voting rights but exercises control through another entity, such as a trust, holding company, or another intermediary. For example, a person who owns 50% of a company that, in turn, owns 30% of another company would be considered to have indirect control over the second company. This type of control must be declared in the UBO Register.

39. Can a company refuse to disclose UBO information to third parties?
    Yes, a company is not required to disclose UBO information to third parties unless required by law. UBO information is considered confidential and is typically only accessible to the company’s management, the Registrar, and relevant regulatory authorities. However, in cases involving AML or CFT investigations, authorities may request UBO information, which the company must provide.

40. What happens if the UBO of a company is a foreign national?
    If the UBO of a company is a foreign national, their details must still be recorded in the company’s Register of Beneficial Owners. This includes providing a valid passport or identity card from their home country, as well as their residential address. The fact that the UBO is a foreign national does not exempt the company from complying with UBO regulations in the UAE.

41. How should a company handle UBO reporting if ownership is held through a trust?
    If a company’s ownership is held through a trust, the Trustee must be declared as part of the ownership structure. Additionally, the Trustor (the person who placed assets into the trust) and the Beneficiaries (those who benefit from the trust) must also be disclosed if they meet the 25% ownership or control threshold. The relationship between the trust and the company must be explained in the UBO Register.

42. What is a Senior Management Official in the context of UBO compliance?
    A Senior Management Official is a person with decision-making authority in the company, such as the CEO or Managing Director. If no UBO can be identified after exhausting all reasonable measures, the Senior Management Official is recorded as the UBO to ensure that there is always a person responsible for the company’s actions.

43. How does UBO compliance interact with anti-money laundering (AML) regulations?
    UBO compliance is closely linked with AML regulations. Identifying and verifying UBOs is a key requirement for preventing money laundering and terrorist financing. Companies are required to report suspicious activities related to UBOs, especially if there is any indication that the ownership structure is being used to hide illicit activities. Non-compliance with UBO regulations can also be considered a breach of AML laws, resulting in additional penalties.

44. What is the process for submitting UBO information to the Registrar?
    UBO information must be submitted to the Registrar through the relevant government or free zone authority. The submission includes the Register of Beneficial Owners, which contains the full details of each UBO. The Registrar may require additional documentation to verify the UBO’s identity and ownership. Companies must ensure that the information submitted is accurate, up-to-date, and submitted within the required time frame (usually within 60 days of incorporation or changes).

45. Can the UBO be an entity, or must it always be a natural person?
    The UBO must always be a natural person. If the ownership is held by an entity (such as a corporation or trust), the entity must be traced back to the natural person(s) who ultimately owns or controls it. The UBO cannot be a corporate entity or a legal arrangement—it must always refer to an individual.

46. What are the specific penalties for failing to update UBO records after a change?
    Failure to update UBO records within 15 days of a change can result in escalating penalties:

    • A written warning for the first violation.

    • A fine of AED 20,000 for the second violation.

    • A fine of AED 40,000 for the third violation. Continued non-compliance can result in further fines, suspension of the company’s license, and potentially even the closure of the company’s business premises until the records are corrected.

47. Can a UBO delegate their responsibilities to another person?
    No, a UBO cannot delegate their responsibilities or ownership status to another person without transferring their ownership or control of the company. The UBO is the individual who ultimately owns or controls the company, and this status cannot be passed to someone else unless there is a change in ownership or control, which must be recorded in the company’s UBO register.

48. What must a company do if it discovers that a previously declared UBO is incorrect?
    If a company discovers that a previously declared UBO is incorrect, it must update its Register of Beneficial Owners within 15 days of becoming aware of the error. The corrected information must be submitted to the Registrar, and any changes must be properly documented. Failure to correct inaccurate UBO information can result in penalties.

49. What is the timeline for companies to comply with UBO regulations?
    Newly registered companies must submit their UBO information within 60 days of incorporation. Existing companies must update their UBO records within 15 days of any changes in ownership or control. Regular updates and corrections should be made as soon as the company becomes aware of any discrepancies in the UBO information.

Ultimate Beneficial Owner (UBO)

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