Ultimate Beneficial Owner (UBO) Guidelines

1. Introduction

This comprehensive guide will help you identify and declare your Ultimate Beneficial Owner (UBO) in compliance with UAE law and SHCC requirements.

2. What is a UBO?

Ultimate Beneficial Owner (UBO) = The real person (natural person) who ultimately owns or controls your company.

3. Why is UBO Information Required?

SHCC is required by UAE law to maintain accurate records of who really owns and controls all registered companies. This requirement is part of:

• UAE's commitment to Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT)
• Compliance with international standards (FATF recommendations)
• Enhancing corporate transparency and preventing financial crimes

4. The Three-Tier Test

As per Cabinet Resolution No. (109) of 2023, you must identify your UBO using the Three-Tier Test. Follow these steps in order:

Test 1: Ownership or Voting Rights (25% or More)

Check if any natural person has 25% or more ownership or voting rights (directly or indirectly).

Indirect Ownership Calculation:

• If Person A owns X% of Company B, and Company B owns Y% of your company
• Person A's indirect ownership = X% × Y%

Test 2: Control by Other Means

If no one meets Test 1, check if any natural person exercises control by other means, such as:

• The right to appoint or remove the majority of directors
• The right to appoint or remove the majority of managers
• Significant influence or control over company decisions

Test 3: Senior Management Officer (SMO)

If no one meets Test 1 or Test 2, the person in the Senior Management Officer (SMO) position is the UBO.

The SMO is typically:

• The Chief Executive Officer (CEO)
• The Managing Director
• The General Manager
• Or the person holding the highest executive position

5. Visual Examples & Scenarios

┌─────────────────┐
│ Ahmed Hassan    │ ← UBO (100% owner)
│ (Individual)    │
└────────┬────────┘
         │ 100% shares
         │
         ▼
┌─────────────────┐
│ ABC Trading LLC │
│ (Your Company)  │
└─────────────────┘

┌─────────────────┐     ┌─────────────────┐
│ Fatima          │     │ Mohammed Al-    │
│ (Individual)    │     │ Rashid          │
│                 │     │ (Individual)    │
└────────┬────────┘     └────────┬────────┘
         │ 50% shares            │ 50% shares
         │                       │
         └───────────┬───────────┘
                     │
                     ▼
            ┌─────────────────┐
            │ XYZ Services LLC│
            │ (Your Company)  │
            └─────────────────┘

6. Complex Structure Examples

The following examples demonstrate more complex ownership structures that may require careful calculation and tracing through multiple layers.

Level 1 (Individuals):
├── Ahmed: 40% of Investment Co. A
├── Fatima: 35% of Investment Co. A
└── Mohammed: 25% of Investment Co. A

Level 2:
Investment Co. A owns 70% of Holding Co. B
Investment Co. C (owned by David 100%) owns 20% of Holding Co. B
Sarah (Individual) owns 10% directly of Holding Co. B

Level 3:
Holding Co. B owns 80% of Your Company (XYZ LLC)
Ahmed (Individual) owns 20% directly of Your Company (XYZ LLC)

Level 1:
├── ABC Family Trust (Beneficiary: Robert Brown 100%)
│   └── 60% of Investment Co. A
└── Sarah Johnson (Individual)
    └── 40% of Investment Co. A

Level 2:
Investment Co. A owns 50% of Holding Co. B
DEF Holdings Ltd. (owned by John Smith 80% and Mary Williams 20%) owns 30% of Holding Co. B
XYZ Nominees Ltd. (nominee for David Williams 100%) owns 20% of Holding Co. B

Level 3:
Holding Co. B owns 100% of Your Company (ABC Healthcare FZ-LLC)

Level 1:
├── ABC Corporation (Listed Company): 40% of Holding Co. A
├── Ahmed (Individual): 30% of Holding Co. A
├── Fatima (Individual): 20% of Holding Co. A
└── Investment Co. B (owned by Mohammed 60% and Sara 40%): 10% of Holding Co. A

Level 2:
Holding Co. A owns 60% of Your Company (XYZ Services FZ-LLC)
DEF Holdings Ltd. (owned by David 70% and Lisa 30%) owns 30% of Your Company
Ahmed (Individual) owns 10% directly of Your Company

7. FZ-LLC Nominee Shareholding Restriction

Nominee shareholding is NOT permitted in FZ-LLCs registered or to be registered in SHCC.

• Shares in an FZ-LLC cannot be held on behalf of the UBO by any nominee
• All shareholders must be real persons (individuals) or legal entities
• If a legal entity is a shareholder, you must trace ownership through that entity to find the ultimate natural persons

This restriction applies to:

• New FZ-LLC registrations
• Existing FZ-LLC companies
• Any changes to FZ-LLC ownership structure

Note: This restriction applies specifically to FZ-LLCs. For branches of foreign companies, nominee shareholding may exist in foreign jurisdictions, and you must identify the real beneficial owners behind nominees.

8. UBO Declaration Form

PDF Fillable Forms

UBO Declaration Forms are available as PDF fillable forms that can be viewed, downloaded, completed, and submitted to SHCC.

9. Company Obligations

1. Create and Maintain Internal Registers

You are legally required to create and maintain two internal registers at your company's registered office:

Register of Beneficial Owners (UBO Register)

This register must contain:

• Full name of each UBO
• Date of birth
• Nationality
• Passport/ID number
• Residential address
• Email address
• Phone number
• Percentage of ownership/control
• Type of control (direct ownership, indirect ownership, voting rights, control by other means, or SMO)
• Date of becoming a UBO
• Date of ceasing to be a UBO (if applicable)

Register of Shareholders/Partners

This register must contain:

• Full name of each shareholder/partner
• Date of birth
• Nationality
• Passport/ID number
• Residential address
• Percentage of ownership
• Date of becoming a shareholder/partner
• Date of ceasing to be a shareholder/partner (if applicable)

Maintenance Requirements:

• Registers must be kept at your company's registered office in the UAE
• Registers must be updated immediately when any changes occur
• Registers must be maintained for the entire duration of your company's existence
• Registers must be available for inspection by SHCC and relevant authorities

2. Submit UBO Information to SHCC

Initial Submission

• When: Upon registration of your company with SHCC
• What: Complete UBO information for all identified UBOs
• How: Complete the UBO Declaration Form (PDF fillable form) and submit to SHCC

Updates

• When: Within 15 days of any change in UBO information
• What: Updated UBO information reflecting the change
• How: Complete the UBO Declaration Form (PDF fillable form) and submit to SHCC

Changes that require updates include:

• Change in ownership percentages
• New UBO identified
• UBO no longer meets the criteria
• Change in control mechanisms
• Change in SMO position
• Any other change affecting UBO status

10. Penalties for Non-Compliance

As per Cabinet Resolution No. (132) of 2023, failure to comply with UBO requirements will result in administrative penalties. The penalties escalate with repeated violations.

Key Violations and Penalties

1. Failure to Create and Maintain a Register of Beneficial Owners

Reference: Cabinet Resolution No. (132) of 2023

2. Failure to Include Required Data in the Beneficial Owner Register

Reference: Cabinet Resolution No. (132) of 2023

3. Failure to Update the Beneficial Owner Register

Reference: Cabinet Resolution No. (132) of 2023

4. Failure to Provide Required Data to SHCC (Registrar)

Reference: Cabinet Resolution No. (132) of 2023

5. Providing False or Misleading Information

Reference: Cabinet Resolution No. (132) of 2023

Additional Consequences

In addition to the administrative penalties above (as per Cabinet Resolution No. (132) of 2023), non-compliance may also result in:

• License suspension or cancellation
• Restriction of business activities
• Enhanced monitoring and reporting requirements
• Criminal prosecution (for serious violations)
• Civil liability for damages

11. Change Management: How to Update UBO Information

Manual Submission Process

Step 1: Download the UBO Declaration Form

1. Download the UBO Declaration Form (PDF fillable form) from the SHCC website
2. Open the form using Adobe Acrobat Reader or compatible PDF software
3. Ensure the form is fillable and all fields are accessible

Step 2: Complete the Form

Fill in all required information:

• Company details
• UBO details (for each UBO)
• Ownership percentages
• Type of control
• Date of change

Select the type of change:

• New UBO identified
• UBO information changed
• UBO no longer meets criteria
• Change in ownership percentage
• Change in control mechanisms
• Change in SMO position
• Other (specify)

Step 3: Prepare Supporting Documents

Gather and prepare the following documents:

• Completed UBO Declaration Form (PDF)
• Updated share register
• Updated corporate structure chart
• Passport/ID copies for each UBO
• Proof of address for each UBO
• Nominee agreements (if applicable for foreign branches)
• Other relevant documents

Step 4: Review and Submit

1. Review all information for accuracy
2. Ensure all required fields are completed
3. Verify that the update is being submitted within 15 days of the change
4. Save the completed PDF form
5. Submit the form and supporting documents to SHCC via:
   • Email: compliance@shcc.gov.ae
   • In Person: SHCC office
   • Mail: SHCC office address

Step 5: Confirmation

1. You will receive a confirmation email or receipt upon submission
2. Keep a copy of the submitted form and confirmation for your records
3. This serves as proof of compliance with the 15-day update rule
4. SHCC will review and process your submission
5. You will be notified once the update is approved

12. Frequently Asked Questions

13. Need Help?

If you need assistance with UBO identification or compliance: