In recent years, businesses in the UAE have been facing stricter transparency rules aimed at combating financial crimes. One of the key elements of these changes has become the norms governing the concept of Ultimate Beneficial Ownership, the real owner of the company. Regardless of whether the company is registered in the mainland, free zone or as an offshore structure, almost all legal entities are required to comply with the requirements for disclosure of information about their ultimate beneficiaries.
This article examines the legal requirements, the criteria for determining UBO, the content of the necessary registers, the deadlines for submitting data, and the consequences for violations, especially for those involved in company formation in UAE.
Who Counts as a UBO?
Under Cabinet Resolution No. 58 of 2020, amended by Resolution No. 109 of 2023, a UBO is any person who meets one or more of the following conditions:
- Holds 25% or more of the company’s share capital, either directly or indirectly
- Controls at least 25% of the voting rights
- Has the power to appoint or remove a majority of the board
- Exercises significant influence over the company through other means
If more than one person meets these criteria, all of them must be recorded. If no one qualifies, the company’s senior management will be listed by default.
Who Needs to Submit UBO Information?
All businesses registered in the UAE are required to submit UBO information to their licensing authority. This includes companies operating in commercial free zones, such as those undergoing business setup in Dubai or expanding through free zone entities.
A few are exempt:
- Entities fully owned by the UAE government
- Companies based in financial free zones such as DIFC and ADGM
- Publicly listed companies with transparent ownership structures
Even companies with a sole shareholder or full foreign ownership must file a declaration.
What Records You Must Keep
To remain compliant, companies are expected to maintain three specific registers:
- Register of Beneficial Owners
- Register of Shareholders or Partners
- Register of Nominee Directors, if applicable
The UBO register should include the following details:
- Full name, nationality, date and place of birth
- Copy of a valid passport or national ID
- Current residential address
- Date the individual became or ceased to be a UBO
- Basis for their UBO classification
All records must be stored at the company’s primary business location and preserved for five years after the business is dissolved.
Submission Deadlines and Required Updates
The initial UBO declaration is due within 60 days of the company’s formation or during license renewal. Miss that, and you’re already playing catch-up. If something changes, maybe a shift in ownership or someone new takes control, you’ve got 15 days to report it. And if the authorities ask for extra documents, you’re expected to hand those over within 14 days too. Skip a step, or get the info wrong? That’s where trouble starts. Fines, follow-ups, and a whole lot of unnecessary stress.
What Non-Compliance Can Lead To
Companies that fail to meet UBO obligations may face serious consequences, including:
- Fines up to AED 1,000,000
- Suspension or cancellation of the business license
- Difficulty opening or maintaining banking relationships
- Loss of trust with regulators, partners, and stakeholders
To date, the Ministry of Economy confirms that more than 700,000 companies have met their UBO filing requirements. Those that haven’t are being tracked by 38 designated licensing authorities across the UAE.
When Structures Are Complex
UBO identification can be more difficult for companies with indirect or multi-layered ownership, particularly those that involve foreign corporations, trusts, or foundations. In certain situations, regulators may decide who needs to be reported using a risk-based methodology. What’s non-negotiable is that the UBO must be a person. Legal entities don’t qualify. If nominees hold shares, the individual who ultimately benefits must be identified.
Why It’s Worth Paying Attention
There is more to meeting UBO criteria than simply checking a box. It clarifies ownership and facilitates communication with banks, authorities, and anybody else who needs to know who is actually running the company. It also keeps you in line with international standards around anti-money laundering, which matters more than ever when reputation is on the line.
But staying compliant doesn’t stop once you file. Details change. People come and go, shares shift. When that happens, the registers need to be updated. And the sooner, the better.
Final Notes
Almost all companies doing business in the United Arab Emirates (UAE) are required by law to comply with UBO. Your business may be subject to fines and regulatory scrutiny if the requirements are not met. If you’re involved in company formation in Dubai mainland or just starting the process of setting up a company in Dubai, it’s essential to factor UBO compliance into your planning. If your business has yet to complete its UBO registration, take action now. In this regulatory climate, transparency isn’t an option. It’s a standard.
Hiking addict, audiophile, Swiss design-head and front-end developer. Concept is the foundation of everything else.
