UBO Register in the UAE: What Startups Must Record

When you set up a company in the UAE, you think about licences, visas and bank accounts. One obligation that often gets missed is the beneficial owner register, usually called the UBO register (UBO stands for ultimate beneficial owner). It is not complicated, but it has firm deadlines, and it matters more as your startup brings in co-founders, investors or holding structures.

This guide explains what the rules say, in plain language, based on Cabinet Decision No. 109 of 2023 on Regulating the Beneficial Owner Procedures. The official text is also published by the Ministry of Economy. It is a guide, not legal advice. For your specific structure, speak to your registrar or a qualified adviser.

What the decision is and when it started

According to the UAE Legislation portal, the Cabinet Resolution Regulating the Real Beneficiary Procedures was issued on 6 November 2023 and became effective on 16 November 2023. It sits within the UAE's anti-money-laundering framework and sets minimum obligations for registrars and for legal persons, meaning companies and other entities.

Who it applies to

Article 3 of the decision says it applies to the registrar and to licensed legal persons in the State, including the free commercial zones. So a free zone startup is not automatically outside it.

The decision lists exemptions:

• companies wholly owned by the federal or a local government, and companies wholly owned by those companies;
• financial free zones, which have their own regimes;
• a governmental partner.

Article 6 also exempts certain entities owned by a company listed on a regulated market with adequate disclosure rules, and majority-owned subsidiaries of such listed companies. Most early-stage startups will not fall into any of these exemptions.

Who counts as a beneficial owner: the 25% test

Article 5 sets out how to identify a beneficial owner. A beneficial owner is whoever owns or exercises ultimate control over the company:

• through direct or indirect ownership of 25% or more of the company's capital, or
• through the right to vote 25% or more, or
• through a chain of ownership or control, or control by any other means, such as the right to appoint or dismiss the majority of the directors.

The decision adds some important rules:

• If more than one person jointly owns or controls a percentage, they are all treated as owners and controllers of that percentage.
• If no natural person can be identified through ownership, the natural person who exercises control by other means is treated as the beneficial owner.
• If still no one is identified, the beneficial owner is deemed to be the natural person holding the senior management position.

The key word throughout is natural person. A holding company cannot be the final answer. You have to look through it to the people behind it.

A founder example

Imagine a startup with three founders holding 40%, 35% and 15%, and an angel holding 10%. The two founders at 40% and 35% each pass the 25% test, so they are beneficial owners. The others do not pass on ownership alone, but you still need to check whether anyone has control in another way, for example a right to appoint most of the board.

Now imagine the 40% stake is held through the founder's personal holding company. The holding company is not the beneficial owner. The founder who owns it is, because the decision covers indirect ownership through a chain.

What the register must contain

Article 8 says the company must keep the details of each beneficial owner in a Beneficial Owner's Record. For each person, the record must include:

1. full name, nationality, and date and place of birth;
2. place of residence, or the address for notices under the decision;
3. passport or identity card number, with country and dates of issue and expiry;
4. the basis on which they became a beneficial owner, and the date they acquired that status;
5. the date they ceased to be a beneficial owner, where relevant.

Article 10 also requires a separate Register of Partners or Shareholders, recording each partner or shareholder's shares, their classes and voting rights, the date they became a partner or shareholder, and identity details.

The deadlines that matter

These are the timelines most relevant to startups, quoted from the decision:

• 60 days to create the record. Article 8 says the company keeps beneficial owner details in a record it creates within 60 days from the date of issuance of the decision or from the date of its existence. For a new company, that means within 60 days of coming into existence.
• 15 days to update it. The same article says the record must be updated to include any change within 15 days from the date the company becomes aware of it.
• 60 days to submit to the registrar. Article 11 says the company must submit the Beneficial Owner's Record and the Register of Partners or Shareholders to the registrar within 60 days from the decision's enforcement or from the company's licensing and registration.
• 14 days for registrar requests. Article 11 also says the company must provide any additional data the registrar requests within 14 days.
• 15 days for shareholder register changes. Article 10 sets the same 15-day window for updating the partners or shareholders register.

Notices when ownership is unclear

Article 7 deals with uncertainty. If it appears that someone could be a beneficial owner but their details are not correctly recorded, the company must ask them. If 15 days pass without a response, the company notifies them formally, setting out the details it believes are correct and asking them to confirm or correct them. If they still do not respond within 15 days of that notice, the company records the notified details.

Article 8 adds that if the company records someone as a beneficial owner without that person having supplied the details themselves, the company must notify them within 15 days.

Nominee directors

Article 9 requires a nominee board member, someone acting on the instructions of another person, to tell the company they are a nominee and provide the required data within 15 days of taking that role. They must also report changes, and tell the company when they stop being a nominee, within 15 days.

Practical steps for startups

At incorporation

• Map your cap table down to natural persons, including anyone behind a holding company or trust.
• Identify everyone at 25% or more of capital or votes, and anyone with control by other means.
• Build the Beneficial Owner's Record and the shareholders register, and submit them to your registrar within 60 days.

At every funding round, transfer or option exercise

• Recalculate who crosses the 25% threshold, up or down.
• Update the record within 15 days.
• Note the date someone became, or stopped being, a beneficial owner.

Article 8 says a company may not register a document changing ownership unless the transferee provides a statement on whether the transfer changes the beneficial owner, along with the new owner's details. Build this into your transaction checklist.

Every year

• Check that IDs and passports on file have not expired.
• Confirm addresses are current.
• Keep the records safe: Article 11 requires reasonable measures to protect them from damage, loss or destruction.

Common mistakes

• Stopping at the holding company. The register is about natural persons.
• Forgetting control rights. Board appointment rights can make someone a beneficial owner without 25% of shares.
• Not updating after a round. Dilution can take someone below 25%, and a new investor can take someone above it. Both are changes.
• Treating it as a one-off. It is a living record with a 15-day update window.

Official sources

• Cabinet Decision No. 109 of 2023, UAE Legislation portal: https://uaelegislation.gov.ae/en/legislations/2176
• Cabinet Decision No. 109 of 2023, Ministry of Economy PDF: https://www.moet.gov.ae/documents/20121/0/CabinetDecision_109_2023_pdf.pdf/3e5363a0-d200-d898-62da-67610520fdc4

Your licensing authority or free zone may have its own portal and forms for submitting this data. Check with them for the exact process.

Get the foundations right

Clean ownership records make banking, fundraising and due diligence easier later. Startup Roof helps UAE founders get these basics in order so they can focus on building. Explore what we do at startuproof.com and join free when it feels right.

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