The UAE government issued Cabinet Resolution 58, to regulate Ultimate Beneficial Owner Procedures in order to increase corporate transparency. Guidelines on UBO for new companies as well as existing companies are covered in the resolution. The resolution shall affect all legal entities that are registered in the UAE mainland and free-zones (with a few stated exceptions). The key point of this resolution is the requirement of preparing and maintaining an Ultimate Beneficial Ownership (UBO) register and supporting documents. Entities must keep this register available at their office at all times. They must also file it with the relevant authorities and notify the authorities of any changes that are made in the register.

The reason behind the declaration is to decrease chances of monetary fraud at a corporate level. Unregulated entities can get involved in financial and economic crimes that can be harmful to a country’s business environment. UBO regulations mitigate this threat by having organizations and institutions identify the party that will ultimately benefit from the actions of a legal entity.

Since filing and maintaining an ownership register of beneficial owner has become a hard requirement, all legal entities should quickly develop an understanding of all the requirements of resolution 58 and the filing processes as well. Before we get into the details, let’s develop an understanding of the term “ultimate beneficial owner”.

What is an Ultimate Beneficial Owner?

A person or party that owns or controls more than 25% of a company’s shares and/or voting rights. It is also the person or party that ultimately benefits from any transactions made by a company. A UBO’s control or ownership of a company can be direct or indirect. The Resolution (cabinet resolution 58) has provided clear-cut application guidelines which are to be followed by all the applicable entities.

UBO Identification

• According to the resolution, the UBO shall be the person who, directly or indirectly, owns and controls a company. Individuals with ownership of at least 25% shares and voting rights of a company, or someone with the power to dismiss and appoint a majority of a company’s directors shall be considered as a UBO.
• In case there is no natural person who meets the above-mentioned conditions, then the UBO shall be someone who has control over a company through other means.
• If no natural person can be identified who meets the conditions stated in the first two points, a person appointed to a higher management position in the company will be considered as the UBO.
• If the conditions stated for identifying a UBO are shared by more than one person (e.g. 25% of voting rights are shared by two individuals) then all of them will be identified as joint owners of the ratio.

The resolution also states that for the purpose of identifying a company’s UBO, any manner of arrangement may be acceptable. This means that companies can turn to multiple legal persons and/or third parties for support. After a UBO has been identified, a company must make sure to maintain an updated record of the UBO’s details at all times.

Declaration

Now that we have a basic understanding of UBOs and Resolution 58’s regulations regarding them, let’s take a look at what do UAE legal entities have to do in order to comply with this law. The resolution has provided a set of detailed Guidelines that legal entities can follow in order to declare their UBO.

According to the resolution, all entities licensed in the UAE have to declare their UBO. The exceptions include:

• Legal Entities licensed in free-zones (Dubai International Financial Center and Abu Dhabi Global Markets)
• Legal entities that are directly or indirectly owned by the Emirate or Federal government.

Entities licensed by free-zones aren’t required to declare their UBO by the resolution. However, most financial free-zones have their own mechanics for identifying and declaring UBOs already in place. The basic conditions for a person qualifying as a UBO and the reason for their identification are similar to resolution 58. However, every free-zone handles this matter in its own manner. For information on UBO declaration in the free-zones, you can learn more by contacting your desired free-zone’s client relations teams.

How to Verify Ultimate Beneficial Owner

In order to identify and verify a business’s UBO, the following approach should be taken:

• Acquire a legal entity’s credentials to check whether the company is registered and legitimate.
• Acquire data on a legal entity’s ownership chain in order to determine all persons who have direct or indirect ownership in the entity through shares or interests.
• Compare the ownership share, share percentage, and management control of all beneficiary owners. This will help you identify the individuals with the greatest amount of control in the company.
• Compare the ownership and control levels of each BO with the UBO identification conditions outlined by resolution 58. The individual who meets the conditions will be the UBO.

Having expert help from third parties can make UBO verification easier. Once a UBO has been identified, a company must gather the necessary information and compile the Register of Beneficial Owner so that it may be submitted to the authorities.

Register

The declaration process involves identifying a UBO and then gathering data related to them that is then entered into the UBO register. The resolution requires legal entities to produce and maintain the following:

• Register of Beneficial Owner
• Nominee Board Member information
• Register of Partners or Shareholders

The Register of Beneficial Owner will contain updated information about a company’s identified UBO. The following data of the UBO must be entered in the register:

• Full name, place and date of birth, and nationality
• Residential address(es) to which notices shall be sent.
• ID card or passport number, issuing country, and the issue date and expiry date
• The date and the basis on which the individual became the company’s UBO.
• The date on which the individual stopped being the company’s UBO.

You can get details of all the data you need to compile the above-mentioned documentation in Cabinet Resolution 58/2020’s guidelines.

Gathering information on your UBO and then compiling documentation for submission can be an extensive and delicate process. Having expert help from  GITPAC can make a huge difference. GITPAC comprises a team of professional accountants, auditors, industry specialists and management consultants with international exposure in the field of accounts, finance, audit, advisory and consultancy services.

GITPAC can help you with:

• Analyzing your ownership chain and verifying UBOs.
• Help you collect data for your UBO, Nominee Directors/Managers, Partners/Shareholders registers, and compile them. They can make sure that your documentation follows the resolution’s guidelines to the letter.
• Help you arrange the filing process with the authorities.
• Help you maintain your registers and make sure that all information in them is updated.

Certificate

Upon successfully complying with the resolution, legal entities receive a UBO Certificate. This provides proof that the company has verified its UBO and that it maintains an updated register containing data on its UBO.

A UBO Certificate can prove to be invaluable if a company ever has to face law enforcement in matters related to financial malintent. The Certificate is issued by the Licensing Authority that is in-charge of the registration of companies in a state.

How can GITPAC Help?

GITPAC  has the experience and knowledge needed to help entities comply with the resolution. Verifying and declaring your UBO is a sensitive matter. The data that you collect and present needs to be accurate and reliable.

• Current Status Overview: We have the manpower and expertise needed to provide you with necessary guidance. They will help collect and verify all the initial information that you must register with your authorities.
• Assistance in Registration: after collecting the needed data, they can organize it and compile it according to the guidelines provided by the authorities. They make sure that your registration submission is free of errors and in accordance with the resolution.
• Provide Continuous Support: during the registration process, entities are often required to present more information as required. We can help you prepare any further data that you need quickly and reliably.
• Regular Review: entities are required to notify the authorities of any amendments in the data that they provide in their registers. We can monitor all amendments in your data and act swiftly whenever an update needs to be provided to the authorities. They can make sure that you don’t fail to notify the authorities within 15 days.
• Deregistration: if your UBO ever changes, you must notify the relevant authorities. We can help you through this process, ensuring that you deregister in accordance with the law.
• Data Confidentiality: the data submitted to the authorities in the registers is not disclosed to anyone. Being a professional and reputable agency, GITPAC can ensure that your data is kept safe .

Having professional help from GITPAC can make the UBO registration process easier for your company. It will also make sure that you meet all requirements on time and without any issue.