UAE strives to stay on top of economic opportunities without compromising on transparency and fair business practices. The authorities are on a constant check to update their policies to make sure no person or entity commits any illicit activity that may cause any harm to the country or negatively influence other businesses. Among many legislations and amendments, the Ultimate Beneficial Ownership, or UBO, is a pivotal step towards prevention of money laundering and illegal funding.
The past decade witnessed astonishing revelations of money laundering, terrorist funding and investment in weapons of mass destruction by renowned entities and individuals. Events such as the Panama Papers and Pandora Box uncovered some big names involved in illegal practices. Such people render considerable harm to their countries by laundering money outside and evading taxes, and disrupt global peace by investing in weapons, funding terrorists and associating with controversial political parties and figures.
On a state level, it is important to curb such activities and discourage any happening by making sure the owners of companies and businesses are documented in the country’s database.
Who is an Ultimate Beneficial Owner
As the name suggests, an ultimate beneficial owner is a person who ultimately benefits from the business. An ultimate beneficial owner is one, more or all of these things:
- A person who has complete or partial control over the business
- A person who directly or indirectly owns a business.
- A person who makes the business transactions or on whose behalf the transactions are made
- A person who holds a minimum of 25% of the company’s shares
- A person who holds the voting rights for a company
- A person who has the authority and power to appoint or dismiss the company’s directors
What Does the UBO Regulation State
The legislation regarding the ultimate beneficial owners came in 2020. The ministry of UAE issued a Cabinet Resolution No. (58) Of 2020 on Beneficial Owner Procedures. This resolution replaced the Cabinet Resolution No. (34) Of 2020 and came into effect from 28th of August 2020.
According to this regulation, all licensed entities i.e. business, company, service providers and more, are directed to file an Ultimate Beneficiary Owner (UBO) register, a Partners and Shareholders register, and a Nominee Director register if it is applicable. The entities must submit this information within 60 days of issuance of the Resolution, or within 60 days of the establishment of the entity.
This resolution, however, exempts the companies directly or indirectly owned by the Federal government or the government of an Emirate. It also excludes entities established in financial free zones.
Penalty for Failure to Register the UBO ( Ultimate Beneficial Ownership )
Effective from 1 July 2021, the UAE government has announced to implement penalties of all businesses and companies that fail to comply by UBO regulation by not registering their ultimate beneficial owner (UBO). A heavy fine of AED 100,000 shall be levied upon all violators. In case an entity continues to violate this rule, the government shall suspend the entity’s license.
Information Required for UBO Registration
Every company in the UAE is required to keep, update and maintain a register in their offices at all times that contains the following information.
- Real Beneficiary
- Name
- Address
- Place of Birth
- Nationality
- Travel ID with date of issuance and date of expiry
- Reason for this person being the real beneficiary
- Dates to- and from- of this person being the real beneficiary
- Partner or Shareholder
- Number of Shares that each shareholder has, along with the shareholder’s voting rights
- Date on which the person acquired those shares
- For Physical Shareholders
- Name
- Address
- Place of Birth
- Nationality
- ID
- Copy of travel document
- For Corporate Shareholders or Partners
- Constitutional documents of such shareholders or partners
- Address
- Details of senior management
- Nominee Director/Director/Manager
- Name
- Address
- Place of Birth
- Nationality
- Name of employer
- Address of employer
- ID or copy of travel document
It is to be noted that each mainland or free zone in an emirate has some differences in the procedures and actions that need to be followed. Entities registered in these areas can find their respective zones and follow the specific actions required.
Significance of the UBO Regulation
The Ultimate Beneficial Owner regulation came in realization of the threats that an undisclosed company can render to both the economy and sovereignty of UAE. A company that has undisclosed owners and activities can easily launder money out of the country, or invest that money in illegal or terrorist activities. Many companies make use of business laws complexities and evade taxes or conceal the illegal and unfair means of becoming wealthy.
With the ultimate beneficial ownership, companies will be under a constant check by the authorities. By the UBO regulations, the person who ultimately benefits from the business is no longer hidden. In an event of detection of fraud or theft or any other illegal activity, the UAE government can easily identify the person to benefit from such an activity.
Conclusion
Because risk variables vary over time, it is important to keep an eye on the risks your company faces and to conduct risk assessments as often as necessary. During this procedure, previously undisclosed dangers may be discovered. You can only adequately plan for and prepare your company to minimize the impact of risks on the attainment of your business’s objectives if you conduct a thorough risk assessment.
BS Auditing of Accounts provides the best services for IT risk assessments and has a team of the best and skilled professionals, trained to carry out the procedure efficiently. We provide the best consultation and assistance in these matters.
Book your consultation today for best interpretation and guidance related to internal risk assessments and other legal and accounting processes. Feel free to contact us:
• Office # 0641, Tamani Arts Offices, Business Bay, P.O. Box 111390, Dubai, UAE
• +971 4 570 7357
• +971 58 108 5690
