# Understanding Ultimate Beneficial Ownership (UBO) in the UAE

## UBO UAE: Essential Insights and Regulatory Compliance

Ultimate Beneficial Ownership (UBO) has become increasingly important in the UAE’s evolving regulatory environment. Businesses are expected to maintain transparency, identify the individuals who ultimately own or control them, and comply with disclosure requirements designed to prevent financial crime.

This guide explains what UBO means, how beneficial ownership is determined, and the key compliance responsibilities for UAE businesses.

## What Is UBO?

Ultimate Beneficial Ownership refers to the natural person or persons who ultimately own or control a legal entity.

A business may have several layers of ownership through other companies or legal arrangements. However, the ultimate individual behind that structure must be identified. That individual is considered the UBO if they meet the applicable ownership or control threshold.

## Example: Identifying the UBO

Assume a UAE-registered company, **X Technology FZC**, has the following ownership structure:

- **60%** is owned by **Y Technology LLC**, registered in a foreign jurisdiction.
- **40%** is owned by **Z Corporation**, registered locally.

### Ownership of Y Technology LLC

- Individual **A** owns **70%** of Y Technology LLC.
- Individual **B** owns **30%** of Y Technology LLC.

### Ownership of Z Corporation

- Individual **C** owns **100%** of Z Corporation.

### UBO Determination

- **A** indirectly owns 42% of X Technology FZC:  
  70% × 60% = 42%  
  Since this exceeds the commonly applied 25% threshold, **A is a UBO**.

- **B** indirectly owns 18% of X Technology FZC:  
  30% × 60% = 18%  
  Since this is below the 25% threshold, **B may not be classified as a UBO**.

- **C** indirectly owns 40% of X Technology FZC:  
  100% × 40% = 40%  
  Since this exceeds the threshold, **C is a UBO**.

## Regulatory Framework in the UAE

The UAE has established regulations to improve transparency, align with international standards, and combat financial crimes such as money laundering and terrorist financing.

Key regulations include:

- **Cabinet Decision No. 58 of 2020**  
  This decision sets out updated UBO requirements and mandates that UAE-registered entities disclose their ultimate beneficial owners.

- **Federal Decree-Law No. 20 of 2018 — GoAML**  
  This law focuses on anti-money laundering and combating the financing of terrorism. It includes requirements for identifying UBOs and reporting suspicious activities.

- **Economic Substance Regulations (ESR)**  
  ESR requires certain companies to demonstrate substantial economic activity in the UAE. Where applicable, companies must also identify and disclose their UBOs as part of ESR-related submissions.

## Key Responsibilities for Businesses

### 1. Identify the Beneficial Owner

Businesses must determine the natural person or persons who directly or indirectly own or control the entity.

A UBO is generally a person who:

- Owns or controls **25% or more** of the shares or voting rights.
- Exercises ownership or control through one or more legal entities or arrangements.
- Jointly owns or controls more than 25% of the capital with other natural persons.

If no natural person can be identified after applying the relevant tests, the person who exercises control by other means may be treated as the UBO. If no such person is identified, the individual holding the highest management position in the entity may be treated as the UBO.

### 2. Maintain UBO Registers

Business entities are required to maintain a UBO register containing the information specified under the applicable Cabinet Decision.

Entities must also maintain a register of partners or shareholders, including details such as:

- Number of shares or voting rights.
- Date of acquisition of ownership or shareholder capacity.
- Other required ownership information.

### 3. Submit UBO Information

Businesses must submit UBO information to the relevant regulatory authority at the time of incorporation.

If changes are made to the UBO register or related ownership registers, the updated information must be submitted to the regulatory authority within **15 days** of the amendment.

### 4. Make UBO Registers Available When Required

Businesses may be required to provide UBO information in certain circumstances, including:

- When dealing with suppliers, vendors, or service providers that must comply with AML requirements.
- When submitting ESR notifications or reports, where UBO details are required.

## Final Words

UBO regulations in the UAE are designed to enhance transparency, support international compliance standards, and prevent financial crimes.

For business owners, meeting these requirements can be complex, especially where ownership structures involve multiple entities or jurisdictions. BCL Globiz supports UAE businesses in understanding and meeting their regulatory obligations, helping them stay compliant while focusing on their core business activities.