Understanding UBO Filing | Legal Services in Dubai

Legal services in Dubai help businesses ensure compliance with various UAE regulations. Expert assistance with UBO filing in UAE allows businesses to identify the beneficial owners, meet disclosure requirements, avoid penalties, and maintain complete regulatory and corporate transparency in compliance.

1. Introduction

Legal services in Dubai have evolved to focus heavily on compliance requirements like UBO filing and corporate governance. Understanding the legal framework of a country is crucial in order to set up any business. It is essential to ensure that the local laws and procedures are proactively complied with at all times. Legal compliance in Dubai is a vast and complex process. Some of the major compliance areas include adhering to the financial regulations, environmental regulations, licensing and registration procedures, employment laws, accounting and auditing practices, and many more. In the chaos of all these procedures, the key aspect of UBO Filing is often overlooked, and this brings forth the need for engaging legal services in Dubai.

2. What is UBO filing, and why does it matter?

An Ultimate Beneficial Owner is a natural person who has the ultimate ownership, control or benefits from the company. According to Article 5 of the Cabinet Resolution No. 58 of 2020, UBO includes any person who owns or finally controls the company through direct or indirect shares or equity of the company’s Capital at 25% or more, or has the right to vote therein at 25% or more. In simple terms, the UBO usually holds 25% or more ownership or voting rights in a company. Legal services in Dubai can help to identify the UBO of an entity.

The UAE has taken significant steps to increase corporate transparency and anti-money laundering compliance. One of the biggest developments in this regard has been the introduction of the Ultimate Beneficial Owner Regulations.
UBO reporting plays a key role in the UAE’s efforts to:

• Prevent Money Laundering & Fraud by ensuring that all financial transactions are transparent and traceable.
• UBO compliance allows the UAE authorities to identify real owners and stakeholders of the company and prevents tax evasion and financial fraud. Legal services in Dubai can help you identify the UBO and stakeholders in your company.
• Aligns the UAE with the Financial Action Task Force (FATF) recommendations.
• Helps to prevent illegal shell companies and identify the hidden ownership structures.
• Avoids Penalties & Fines due to non-compliance with the UBO regulations.

3. Legal framework around UBO in Dubai

The primary laws governing the UBO compliance are:

• Cabinet Resolution No. (109) of 2023 on the Regulation of Real Beneficiary Procedures – This resolution supersedes Cabinet Resolution No. (58) of 2020 which was the primary regulation on UBO procedures, and clarifies the disclosure procedures, expands the definitions and imposes penalties. The New Resolution applies to all corporate entities incorporated in the UAE mainland and in the non-financial free zones.  
• Cabinet Decision No. (132) of 2023 – This resolution relates to the administrative penalties for violations of the Cabinet Resolution No. 109 of 2023, which was issued on 15 December 2023 and superseded Cabinet Decision No. 53 of 2021. 
• The UBO Regulations in Dubai mandates every entity registered in the DIFC to maintain a private UBO register at its registered office, unless the entity concerned qualifies for an exemption. ​ A detailed assessment must be carried out in order to determine whether the DIFC entity qualifies for an exemption.
• If a DMCC member company is also a member of a DMCC association, membership or clubs then no further documentation will need to be provided in respect to KYC and UBO information, unless the information already in DMCC’s possession is not up to date. 

Employing legal services in Dubai can help ensure that your company complies with all the various resolutions and regulations that may be applicable.

 4. Step by step process for UBO filing in Dubai

Engaging business law and other legal services in Dubai can help to assist clients through each of the following steps to ensure accuracy.

Step 1: Identify the Ultimate Beneficial Owner- Determine who owns 25% or more of the company. In case no such individual exists, identify all those who exercise control over the company. This may include shareholders, promoters, senior management, etc.

Step 2: Collect and verify the required documents- For individuals, the required documents include valid government-issued identification such as a passport or National ID Card, control details and ownership information. Whereas, for companies, the documents may typically include the company’s commercial registration certificate, MOA and AOA, and identification certifying the shareholder information. 

   Step 3: Submit to the relevant authority – The legal compliance filing includes filing the UBO details with the relevant licensing authority. This includes the DED for the mainland or the respective freezone authority.

   Step 4: Update records as per law- UBO details must be confirmed every year. It is important to ensure that all UBO information is up to date and accurate at all times.  All updates must be submitted within 15 days of any change in ownership or control.

5. Common Challenges and Penalties for Non-Compliance

Some of the common mistakes made by businesses in UBO compliance in Dubai are–

• Incomplete or insufficient documentation can lead to rejection of submissions
• Failure to maintain and update the UBO register
• Inaccurate and inconsistent data in the submitted documents
• Incorrect assumptions about the applicable exemptions

Penalties for non-compliance–

• Inaccurate or non-submission of UBO records can result in fines up to AED 100,000.
• Non-compliance with the regulations may lead to revocation or suspension of the company’s license.
• Administrative action and financial penalties may be imposed for failure to update UBO records.
• Legal action and further financial penalties for repeat violations.

Why Professional Legal Support is Essential for UBO Compliance

Legal services in Dubai provide an easy and reliable way to ensure that your company follows all the necessary compliance procedures and regulations. Engaging a legal expert helps to avoid unnecessary penalties and consequences of non-compliance.

6. How do legal consultants simplify UBO filing in Dubai?

The process of UBO filing in Dubai is a complex and intricate one. This brings forth the need for legal services in Dubai. Legal consultants bring a combination of expertise and guidance that is essential in order to navigate through the multi-layered regulations. These consultants can offer personalized guidance and help to reduce legal risks and potential issues.

With Arnifi’s expert consultants, businesses can handle UBO filing in Dubai efficiently and stay fully compliant with UAE regulations. At Arnifi, we handle the full UBO filing process from start to finish. We provide streamlined assistance for compliance consultancy and UBO filing services.  

• Prepare and file the necessary documentation- Our legal experts interact with the relevant licensors and registrars, submit the documents, respond to requests, monitor the approval and provide all the necessary UBO filing services.
• Track renewal dates and changes- Our legal team tracks the renewal dates and the various changes in the compliance procedures in order to ensure a smooth experience.
• Advisory services- Our legal experts can provide advisory services and compliance consultancy, as well as clarify and respond to any questions that you may have.
• Combine UBO filing in Dubai with other compliance matters such as VAT, ESR, and license renewals.

Our comprehensive approach helps you save time and helps your business avoid any unnecessary penalties. Our legal services in Dubai ensure that your business can stay fully compliant with the UAE regulations. 

7. UBO Filing and Broader Legal Compliance in Dubai

 UBO filing in Dubai and the UAE is a part of a broad regulatory ecosystem, including-

• Anti-Money Laundering and Counter Financing of Terrorism
  UBO disclosures are an essential part of an organization’s AML due diligence and compliance framework. KYC procedures require UBO information in order to verify various identities and monitor risks.
• Economic Substance Regulations (ESR)
  Some UAE businesses may be required to demonstrate substance in the UAE. Transparency in beneficial ownership support can help support the claims that an entity is not a mere shell.
• Corporate Governance & Reporting
  UBO compliance is a major element of board oversight, governance audits, as well as regulatory reporting obligations.
• Cross-border / international compliance

Having clear UBO disclosures while dealing with foreign entities such as banks, regulators or investors, enhances trust and helps with cross-jurisdictional due diligence.

8. FAQs

 Q1: What is UBO filing in Dubai?
UBO filing in Dubai is the mandatory requirement for most UAE licensed legal entities to submit information about their Ultimate Beneficial Owner (UBO). The UBO is the natural person/persons who ultimately own or control the entity.

 Q2: Who needs to submit a UBO declaration in Dubai / UAE?
Most mainland and non-financial free zone companies in the UAE must comply, unless they fall under specific exemptions that are mentioned in the relevant Cabinet Resolutions. Legal services in Dubai can help to assess whether your entity is in scope or exempt.

 Q3: What documents are required for UBO filing in Dubai?
The required documents include full name, nationality, date/place of birth, residential address, identity or passport details, the basis and date of beneficial ownership, and proof of shareholding or control.

 Q4: How can legal services in Dubai help with UBO compliance?
Legal services in Dubai can help to identify the correct UBOs, audit ownership structures, examine supporting documents, submit necessary filings, monitor changes, handle and respond to notices or queries, as well as integrate UBO compliance with AML / corporate governance.

 Q5: What are the penalties for not filing UBO details?
Penalties for violations range from written warnings and fines, suspension or revocation of trade license, restrictions on board powers, and reputational or operational harm

9. Conclusion

UBO filing in Dubai is an essential element of corporate transparency and AML compliance. Legal services in Dubai have evolved to support this need and assist companies in navigating through complex documentation, updates, and regulatory procedures. Errors in the UBO compliance can result in heavy penalties and damages to the company’s reputation, making engaging expert business consultants a necessity.

If you are uncertain about UBO obligations and compliance procedures, Arnifi’s legal services in Dubai and UAE are ready to help. Contact us to ensure you stay compliant, avoid fines, and operate with confidence in the UAE regulatory environment.