Ultimate Beneficial Owner (UBO)

Navigating the complex landscape of Ultimate Beneficial Ownership (UBO) regulations is paramount for businesses, particularly in the United Arab Emirates (UAE). This comprehensive guide aims to elucidate the definition of UBO, underscore its importance, outline the stringent requirements for UBO filing in the UAE, explore exemptions, detail penalties for non-compliance, delve into the associated benefits, and elucidate the reasons to choose IMC for expert UBO declaration services.

Definition of UBO

The term Ultimate Beneficial Owner (UBO) pertains to any natural person holding or controlling a minimum of 25% of a company’s issued share capital, whether through direct or indirect ownership, having the authority to appoint or dismiss a majority of the directors, or being involved in managing or administering the company. Additionally, nominee directors acting on instructions from another person fall under the UBO definition, emphasizing the importance of identifying the actual controlling entities within an organization.

Why Does UBO Matter?

The significance of UBO goes beyond mere regulatory compliance. Knowing your ownership structure inside out is a strategic move that enhances credibility and fortifies your business against compliance risks. By ensuring transparency in ownership, companies can make informed decisions, build trust with stakeholders, and establish a robust foundation for sustainable growth.

Requirements of UBO Filing

Disclosure of UBO Information

Beyond the basic company details, accurate information about UBOs is mandated, including their full name, date of birth, nationality, residential address, and the extent of their ownership or control.

Maintaining UBO Register

Companies are required to maintain a UBO register, regularly updating it and making it available for inspection by competent authorities upon request. This comprehensive record is crucial for ensuring transparency in ownership structures.

Nominee Arrangements and Trusts

Nominee arrangements and trusts that could impact UBO identification are closely monitored. The transparency of actual beneficiaries behind such arrangements is crucial for regulatory compliance.

Compliance and Reporting Obligations

Companies operating in the UAE must comply with UBO regulations and submit accurate reports to the relevant authorities. Non-compliance can result in severe penalties, fines, or even suspension of business operations.

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Companies Exempted

While the requirement to disclose Real Beneficiary details applies to most companies, certain entities are exempted. Companies owned by the Federal government and its subsidiaries fall outside the purview of UBO disclosure requirements.

Penalties Related to Real Beneficiary Disclosure

The UAE government stringently enforces the UBO regulations with hefty penalties imposed on the violators. The government issued Cabinet Decision No. 53 of 2021 to ensure the strict enforcement of UBO regulations in the UAE. The following are some of the key violations and the corresponding UBO penalties specified in the Cabinet Decision.

AED 50,000 for the first time & AED 100,000 with the suspension of trade license for 12 months in case of repetition for companies failing to create the UBO registers
AED 20,000 (for the first time) & AED 40,000 with the suspension of trade license for at least six months (for subsequent repetition) for companies failing to include the mandatory details in the registers
AED 10,000 (for the first time) and AED 20,000 with a suspension of trade license for at least one month (for subsequent repetition) for companies that fail to maintain adequate, accurate, specific and updated data of Beneficial Owner or fail to accurately record the Beneficial Ownership
AED 20,000 (for the first time) and AED 40,000, along with restriction of the powers of the board members or directors (for subsequent recurrence) for companies that fail to disclose the mandatory data regarding the details of the director or nominal board member
AED 50,000 (for the first time), followed by a fine of AED 100,000 and suspension of the trade license for at least Twelve (12) Months (in case the violation repeats) for companies that fail to create the PSR
Fine of AED 30,000 (first instance) followed by a penalty of AED 60,000 and suspension of the trade license for at least six months (in case of repeating the violation) for companies failing to maintain the information in all partners or shareholders in the PSR
A penalty of AED 15,000 will be imposed on companies that fail to provide information on RBR and PSR and fail to maintain the registers safe from damage, loss or destruction. Subsequent occurrences of the violation will lead to a fine of AED 30,000 and suspension of the trade license for at least three months

AED 5,000 (for the first instance) and AED 10,000 and suspension of the trade license for at least one month (subsequent occurrence of the violation) for companies that fail to provide any additional information requested by the Registrar
Companies must disclose to the Registrar the name of the UAE-resident individual responsible for disclosing all the mandatory days and information. Failure of this obligation will incur a first-time penalty of AED 1,000, a penalty of AED 2,000, and suspension of the trade license for at least one month for repeating the violation
A company that fails to issue shareholder’s share guarantees will incur a penalty of AED 5,000 in the first instance and a penalty of AED 10,000 for further recurrence of the violation
Companies should provide the Registrar with information on shares and stocks issued to persons or board members. They should also disclose the identity of such persons or board members to whom the shares or stocks were issued. Failing to do so within fifteen days of issuance will attract a penalty of AED 5,000 in the first instance and AED 10,000 and a restriction of the powers of the board members, directors or owners if the crime is repeated
AED 5,000 fine will be imposed on companies under liquidation that fail to hand over to the liquidator the Register of Beneficial Owner and Register of Partners or Shareholders within Thirty days of appointing the said liquidator. The fine will escalate to AED 10,000 and suspension of the trade license for at least one month if non-compliance is repeated
Companies under liquidation will incur a penalty of AED 20,000 if the administrator or the liquidator fails to maintain the mandatory records and registers for at least five years from the date of dissolution, liquidation or de-registration. If the violation is repeated, a penalty of AED 40,000 will be incurred

Benefits

Adherence to Regulatory Standards

Strict adherence to UBO regulations ensures compliance with regulatory standards, mitigating the risk of penalties and legal issues.

Identification of Risks in Ownership Structures

Thorough UBO disclosure facilitates the identification of potential risks associated with complex ownership structures, enabling proactive risk management.

Thorough Due Diligence in Business Transactions

Accurate UBO information streamlines due diligence processes, fostering trust and facilitating smooth business transactions.

Strengthened Corporate Governance

UBO disclosure promotes transparent corporate governance, enhancing the overall integrity and accountability of the organization.

Alignment with UAE Legal Requirements

Ensuring compliance with UBO regulations aligns businesses with the legal requirements of the UAE, fostering a conducive regulatory environment.

Establishment of Trust Among Stakeholders

Transparent UBO disclosure builds trust among stakeholders, including investors, customers, and regulatory bodies, contributing to the long-term success of the business.

Why Choose IMC

Peace of Mind

Partnering with IMC for UBO needs provides peace of mind, allowing businesses to focus on growth with confidence in their regulatory compliance.

Customer Satisfaction

IMC prioritizes customer satisfaction, ensuring clients are compliant and content with the services provided.

Timely Support

The IMC team is readily available to offer timely support and guidance, helping businesses navigate the complexities of UBO requirements efficiently.

Confidentiality

Recognizing the sensitivity of financial information, IMC ensures the privacy and security of all information provided to them.

Trusted Partner

Choosing IMC means aligning with a trusted partner committed to working collaboratively to ensure ongoing compliance with all necessary regulations.

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