A corporation may have been diligent in maintaining shareholder records, but it still may be unclear as to who actually owns or controls the business.
Difficulties may arise when the ownership of the company is funneled through holding companies, numerous shareholders or foreign bodies.
In these cases, the identification of the ultimate beneficial owner (UBO) will be much more complex than merely checking the name on the trade licence.
According to The Cabinet Decision No. 109 of 2023, it is the obligation of UAE legal persons to implement
“All reasonable measures to maintain accurate and up-to-date information on the beneficial ownership interests of the legal person to the extent it can be obtained through the application of reasonable measures”.
The same rule can also be used to establish indirect ownership and control by other methods.
For businesses in the UAE the key practical concern is usually the extent to which their individual UBO records will correspond with their existing ownership structure. Otherwise, a corporate lawyer is needed to double check that structure, find proper UBO, check for any change of ownership and control, and keep the company‘s books balanced in relation to its legal liabilities.
What Is UBO Compliance in the UAE?
Ultimate Beneficial Owner (UBO) compliance refers to a company’s obligation to identify and maintain accurate information about the natural person who ultimately owns or controls the business.
Under Cabinet Decision No. 109 of 2023, this can be a person who directly or indirectly owns 25% or more of a company’s capital or voting rights, or who exercises ultimate control.
A straightforward company with individual shareholders, the identification of UBO is relatively simple. It often becomes complex when a UAE company is owned by another company, particularly where the ownership chain extends across several jurisdictions.
UBO compliance involves more than just recording shareholder names.
It requires companies to better understand their ownership and control structure, maintain the required records and update that information when the structure changes.
Which UAE Businesses Need to Maintain UBO Information?
The UAE’s UBO requirements apply broadly to legal persons registered or licensed in the country, including entities established in commercial free zones.
However, there are specific exclusions for certain demographics.
This decision does not apply to:
- Companies wholly owned by the UAE Federal or local government, or companies wholly owned by those entities.
- Legal persons established in financial free zones.
- A legal person with a governmental partner, to the extent provided under the decision.
If you’re a business operating in Dubai, the difference between a commercial free zone and a financial free zone can therefore affect whether the UBO framework applies. It’s often advised that companies should consider the requirements of their particular registrar when maintaining or updating their records.
However, if you’re a corporate group with subsidiaries, holding companies or overseas shareholders, determining the applicable requirements can require a closer review of the company’s legal structure. This will require a corporate lawyer who can assess the entity, its ownership arrangements and the relevant registration authority before advising on the records and disclosures that need to be maintained.
How Is the Ultimate Beneficial Owner Identified?
Identifying the UBO requires a company to look beyond its immediate shareholders and determine who ultimately owns or controls the legal entity.
Under Cabinet Decision No. 109 of 2023, the assessment can involve direct ownership, indirect ownership and other forms of control.
Direct ownership: An individual may qualify as the UBO where they directly own 25% or more of the company’s capital or voting rights.
Indirect ownership: The assessment can extend through a chain of ownership. For example, if a UAE company is owned by another company, the business may need to trace that corporate shareholder through each level of ownership to identify the natural person who ultimately holds the relevant interest.
Control through other means: Ownership percentage is not the only consideration. A person may qualify where they exercise ultimate control through other arrangements, including the right to appoint or dismiss the majority of the company’s directors.
Where no UBO can be identified: If reasonable measures have been exhausted and no natural person with ultimate controlling ownership can be identified, the rules provide for further assessment of control through other means. Where no natural person can ultimately be identified under the prescribed criteria, a senior management official may be treated as the beneficial owner.
If you belong to a company with layered or international ownership structures, a corporate lawyer such as one from Maaf Legal can review your complete ownership chain and supporting documents.
What UBO Records Must a Company Maintain?
UBO compliance requires a company to maintain accurate records which may reflect current ownership.Under Cabinet Decision No. 109 of 2023, the company must maintain a Beneficial Owner’s Record, along with its register of partners or shareholders and other corporate information required under the applicable rules. The Beneficial Owner’s Record should include information such as:
- Full name, nationality, date and place of birth of the UBO.
- Residential address or address for official notifications.
- Passport or identity document details, including the issuing country and relevant dates.
- The basis on which the individual became the UBO, including the date on which that status arose.
- The date on which the individual ceased to be the UBO, where applicable.
The company must also keep this information accurate and up to date.
Any change to the Beneficial Owner’s Record must reflected within 15 days of the company becoming aware of the change.
Changes to other information covered by the decision must also be submitted to the relevant Registrar within the prescribed 15-day period.
It instigate record-keeping as an ongoing responsibility.
What Can Go Wrong With UBO Compliance?
UBO issues often arise when a company’s records no longer match its actual ownership structure.
A few common problems may include:
- Recording a corporate shareholder without tracing the ownership chain to the natural person behind it.
- Failing to update the Beneficial Owner’s Record after a share transfer or restructuring.
- Using outdated identification or ownership information.
- Overlooking control rights that may affect who qualifies as the UBO.
- Keeping different ownership information across corporate documents and official records.
How Can a Corporate Lawyer Help With UBO Compliance?
A corporate lawyer from Maaf Legal can help businesses assess their ownership structure and determine whether their UBO records accurately show their current position or not.
It may include:
- Reviewing direct and indirect ownership structures
- Tracing ownership through holding companies and corporate shareholders
- Assessing voting rights and other forms of control
- Identifying the appropriate UBO under the applicable rules
- Reviewing the Beneficial Owner’s Record and supporting documents
- Advising on changes following share transfers, restructuring or changes in control
- Helping businesses address inconsistencies in their corporate records
UBO Compliance Checklist for UAE Businesses
Businesses in the UAE can use the following checklist as a practical starting point:
- Update the record within the applicable timeframe.
- Seek legal advice where the ownership structure is complex.
- Identify all direct shareholders.
- Trace indirect ownership to the natural persons behind the structure.
- Review ownership and voting rights.
- Assess other forms of control.
- Identify the appropriate UBO.
- Maintain an accurate Beneficial Owner’s Record.
- Keep supporting ownership and identification documents.
- Review UBO information after corporate changes.
Frequently Asked Questions
What does UBO mean in the UAE?
UBO (Ultimate Beneficial Owner) is the natural person who ultimately owns or exercises ultimate control over a UAE company, directly or through a chain of ownership.
Who qualifies as a UBO?
Any individual who directly or indirectly owns ≥25% of the company’s shares/capital or voting rights, or who can appoint/dismiss the majority of managers or otherwise exercises ultimate control.
Does a company shareholder automatically become the UBO?
No. Only natural persons can be UBOs; if a shareholder is a company, ownership must be traced up the chain until the real individuals are identified.
Can a company have more than one UBO?
Yes. Where two or more individuals jointly own or control ≥25% (or jointly exercise control), all are treated as UBOs under Cabinet Decision No. 109/2023.
What happens if the UBO cannot be identified?
If no individual meets the 25% test, the person controlling the company “by other means” is considered the UBO; if still unclear, the senior manager responsible for day‑to‑day operations is treated as the UBO for compliance.
Can a corporate lawyer help with UBO compliance?
Yes. Lawyers can map ownership structures, review corporate records and changes in control, and advise on who qualifies as UBO and how to maintain the required registers and filings.
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Mai Alfalasi Advocates & Legal Consultancy
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Dubai, United Arab Emirates
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Email. info@maaflegal.ae
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