7 Essential UAE UBO Filing Mistakes to Avoid

Table of Contents

Introduction

It is essential to know the necessary requirements and regulations concerning UAE UBO filing as part of business compliance. It will help you keep records about ultimate beneficial owners up-to-date and avoid compliance problems.

What Is UAE UBO Filing?

UBO filing entails finding out who actually owns the legal entity or controls it and keeping or providing the information as needed by the particular regulations.

The individual whose name would be on the share certificate of a company does not necessarily have to be the UBO of that particular company. The individual might be exerting control and/or owning the legal entity via a third party such as another company or any other method.

If, for example, an individual owns a company which in turn owns shares of the company operating in the UAE, then he might be considered the UBO of the latter company.

The aim behind UBO filing in the UAE is to increase transparency and ensure that companies are not used in any illegal activity such as money laundering and terrorist financing.

Who Must Comply With UAE UBO Requirements?

Requirements of the UBO regime usually relate to companies and other entities that fall under the UAE laws governing the regime. Nevertheless, the extent of the obligation, submission procedure, and any exclusions will vary depending on the entity and its licensing/registration body.

Businesses that should assess their obligations include:

Mainland companies licensed by the relevant emirate’s economic department.
Companies registered in UAE free zones.
Businesses with foreign shareholders or multi-layered ownership structures.
Companies whose ownership or control arrangements have recently changed.

Some organizations might have exemptions under the regulations. For instance, some government-owned organizations and businesses covered by certain disclosure regimes might receive special consideration.

Note: Do not assume that all free zone business firms follow the same procedure. Not all organizations are subject to the same regulatory requirements. Consult the appropriate licensing body regarding the correct regulations.

Who Qualifies as an Ultimate Beneficial Owner in the UAE?

Finding the appropriate UBO is one of the key things in UAE UBO registration.

In terms of the general UBO rules in UAE, an individual who directly or indirectly holds or controls 25 percent or more of shares and voting power of a company can be considered a UBO. An individual who controls in other ways can be considered a UBO.

One should consider the relevant rules in regard to the entity and specific filing situation.

1. Direct Ownership

In direct ownership, the owner or the individual possesses shares in the company in his name.

In case an individual has a direct ownership of 30% of any UAE based firm, then he satisfies the criteria for UBO.

2. Indirect Ownership

Indirect ownership means that the person owns or controls the business by using some other entity or entities in between.

It is important to understand the ownership path entirely instead of looking at the owners only just above the UAE business.

3. Control Through Other Means

A person can be an individual UBO despite not having the requisite shareholding because he exercises ultimate control through voting or any other means provided for under the laws.

4. Identifying the Relevant Individual When No UBO Is Identified

Where the corporation is unable to identify such a person using the ownership or control tests, there may be an alternate method provided for in the regulations that can be used depending on who is in control of the corporation’s management.

The corporations need to show how they determined and followed the specific alternative method.

UBO Documents Required in the UAE

The preparation of UBO documents properly can assist business firms to comply with their procedures effectively. This will differ in relation to the regulatory authority in the mainland, the free zone, and the entity itself.

Common documents required are:

Passport copy: Identification for each relevant beneficial owner.
Emirates ID: Where applicable and requested by the authority.
Shareholders’ register: Information about the company’s shareholders and their ownership shares.
Memorandum of Association (MOA): Constitutional documents which prove ownership or control relations.
Corporation shareholders’ documents: Registration certificates, shareholders’ register or equivalent documents of intermediary corporations.
Ownership structure chart: A diagram showing direct and indirect ownership, where useful or required.
Contact details: Current address and other identifying information requested by the authority.
UBO declaration: A completed declaration or prescribed form, if required.
Supporting control documents: Relevant agreements or records that explain control arrangements where share ownership alone is insufficient.

Not all organizations will require all items from this list. Review the checklist of documents that your licensing agency has published to see if you need to use certified/translated/attested documents.

UAE UBO Filing Process: Step by Step

The filing procedure depends on the concerned registering authority. The procedure given below is a practical general approach.

Step 1: Review the Company’s Ownership Structure

Obtain a copy of the company’s share register, its constitution papers, and any documentation related to indirect ownership or control.

Determine those individuals who can potentially be considered as UBOs.

Step 2: Confirm Beneficial Owner Details

Verify the correctness of the name, identity information, nationality, ownership percentage, and other information through the matching process with relevant documentation.

Sort out any differences before uploading the information.

Step 3: Preparation of Necessary Registers and Declaration

Gather the details for beneficial ownership as well as prepare the required UBO register/declaration/documents.

The details should reflect the real ownership and control of the company.

Step 4: Submit Information Through the Appropriate Channel

Please adhere to the instructions of the pertinent authority in the mainland, the free zone registrar, or any other relevant registration authority.

The procedure will depend on the concerned authority; it could be through an online portal, license application, company register amendment, among others.

Step 5: Keep Evidence of Submission

Retain copies of the confirmation of submission, correspondence pertaining to the submission, and the documents that were submitted to the company. These documents serve as proof that the proper process was followed.

Step 6: Maintain and Update the Records

UBO compliance does not have to be a one-off effort. Ensure that there is an internal process for verifying and updating ownership information as changes arise.

UAE UBO Filing Deadline: What Businesses Should Know

It is important to know when a filing can be made concerning the UAE UBO filing deadline since the deadlines applicable will be dependent on whether the company is newly registered, making a first-time filing or just updating its records.

According to the general regime outlined in the UAE Cabinet Decision No. 109 of 2023, companies that fall within the scope of the regime are supposed to keep beneficial ownership information updated during the prescribed period. There is a 15-day period linked to the updating of relevant information in the regime.

This does not mean that businesses will apply it as the only filing deadline across all types of filings.

Companies should pay attention to the following situations:

New company registration: Determine when the initial ownership information must be provided.
Beneficial ownership change: Check the appropriate period to update the pertinent record.
Shareholder or control change: See if there is a change in the UBO information.
Authority request: Answer the request within the stated deadline for any further information or correction.
Periodic compliance check: Evaluate the pertinent requirement even without a change in the beneficial ownership.

A practical approach is to notify the person responsible for compliance as soon as a change occurs rather than waiting until the end of a filing period.

What Happens If a Company Fails to Meet UBO Requirements?

If the beneficial ownership data is not provided or complied with, there can be several legal repercussions for the company based on the applicable regulations.

The legal consequences can range from administrative steps to requests for correction of the deficient documentation, increased regulation activities, and license and registration issues.

It is important to keep in mind that various violations and regulations can result in varied legal consequences. Companies must consult existing regulations rather than a single number assigned to each violation.

To avoid such risks of compliance, companies must:

Keep shareholder and beneficial ownership records accurate.
Maintain supporting identification and ownership documents.
Assign responsibility for compliance updates.
Review indirect ownership whenever the corporate structure changes.
Respond promptly to requests from the licensing authority.
Retain evidence of filings and subsequent amendments.

Mainland vs Free Zone UBO Filing

Mainland and free zone businesses should both assess their beneficial ownership obligations, but the practical filing arrangements may differ.

Area	Mainland companies	Free zone companies
Relevant authority	Applicable emirate-level licensing authority	Relevant free zone registrar
Submission method	Authority-specific procedure	Free zone-specific portal or procedure
Documents	Based on applicable rules and authority checklist	Based on applicable rules and free zone requirements
Deadlines	Verify the applicable legal and administrative time limits	Verify the relevant free zone’s requirements
Updates	Follow the prescribed update process	Follow the prescribed update process

Companies should not assume that a process used by one authority automatically applies to another. Confirm the requirements for the company’s specific licence and registration status.

Practical UBO Compliance Checklist

Follow this list for arranging compliance activities in your company:

Identification of all direct stakeholders.
Ownership trail should be followed through intermediate companies.
Identification of those who have voting rights or other forms of control.
Confirm the identity of each person in question.
Prepare the required ownership register and declaration.
Confirm the applicable documents and submission method.
Verify the initial filing or update deadline with the authority.
Keep submission confirmations and supporting records.
Create an internal process for reporting ownership changes.
Review the latest applicable rules periodically.

Completing these steps can help your business maintain more reliable ownership records and respond efficiently to compliance requests.

Conclusion

UBO filing in UAE is a significant step towards ensuring proper and accurate recording of ownership information. It’s vital for businesses to determine the beneficial owners, compile the necessary documentation, understand filing deadlines, and maintain updated records in case of ownership and control changes.

Due to differences in requirements based on company classification and licensing authority, it’s necessary to be aware of all the relevant regulations.

If you need assistance understanding your company’s ownership disclosure obligations, E-Startup can help you navigate UAE business compliance requirements and identify the next steps for your business. Contact E-Startup to discuss your requirements and get guidance on the appropriate process.

Frequently Asked Questions

1. What is the UBO filing requirement in the UAE?

The general criteria for UBO filings are the identification of the natural persons owning or controlling the company, keeping and updating the relevant beneficial ownership data, as mandated by the relevant authority.

2. What is the ownership threshold for a UBO in the UAE?

Under the UAE umbrella regime, a person who holds or exercises direct or indirect ownership or control over 25% or more of the shares or voting rights may be deemed as a UBO.

3. What documents are required for UAE UBO filing?

The most common document requirements are passport copy, share register, constitutional documents, ownership structure information, and UBO declaration. It will depend on the regulatory body and structure of the company.

4. What is the UAE UBO filing deadline?

This will depend on the kind of notification and the requirements of the relevant authorities. The general rules state that there is a fifteen day period for some notifications, but companies must find out their specific deadlines.