Who is an Ultimate Beneficial Owner?
Ultimate Beneficial Owner refers to the ultimate natural person who controls or owns the legal person whether directly or through a chain of ownership or control or any other indirect means such as the right to appoint or dismiss the majority of the directors from the Board of Directors. This also includes those natural persons on behalf of whom the transactions are being conducted or who exercise ultimate control over a legal person. The Ultimate Beneficial Owner should also be in possession of the following:-
- 25% or more of the direct or indirect equity shares of the company.
- 25% or more of the voting rights in the Legal Person.
When two or more partners have joint control over the ratio of capital in a Legal person then they should jointly be considered as owners.
If in case, after all, means an Ultimate Beneficial Owner cannot be determined or if there is reasonable doubt that the natural person identified as a legal person is actually the Ultimate Beneficial Owner then the natural person who controls the legal person by other means shall be considered as the Beneficial Owner; If no such person can be identified then the natural person who holds the position of a higher management official (e.g. CEO or CTO etc.) can be considered as the Beneficial Owner.
Let’s take an example of how to determine a Beneficial Owner:
ABC ltd. has 4 partners each having a shareholding of 25% in the company. In this case all of the partners are Beneficial Owners of the company & each of their details need to be maintained in the UBO register
How to register an Ultimate Beneficial Owner?
In order to register a beneficial owner the legal person must maintain a Beneficial Owner register within 60 days of obtaining a license. The data included within this register should be submitted to the registrar.
What is an entity expected to maintain in its records for the purposes of UBO?
An entity is expected to maintain all of the following in its records:
- Register of Beneficial Owner.
- Register of Partners or Shareholders.
So what does the Register of Beneficial Owner & Register of Partners or Shareholders include?
The register of Beneficial Owner maintains the following data for each of the Beneficial Owner’s:
- Full name, nationality, date and place of birth.
- Residential address.
- Number of passport or identity card, the country of issuance, date of issuance and expiry.
- Basis and date on which the person became a Beneficial Owner of the Legal Person.
- Date on which the person ceased to be a Beneficial Owner of the Legal Person.
A Register of Partners or Shareholders shall maintain the following data for each of the partners or shareholders:
- The number of shares held by each of them along with their categories & voting rights.
- The date on which they gain such a capacity in the legal person.
- In case of natural partners or shareholders: the full name as it appears on the identity card or the passport, nationality, address, place of birth, name and address of employer and a true copy of the valid passport or ID.
- In case of a corporate partner or shareholder the following details are required:
- Name, legal form and memorandum of association.
- Head office address or the principal address of the business and, in case of a foreign Legal Person, the name and address of its legal representative in the State, with proof thereof.
- Articles of Association or any other similar documents approved by the Relevant Entity in the State.
- Names of the relevant persons who are holding higher management positions in the Legal Person, providing their data from their passports or identity cards, including such documents’ numbers, issuance and expiry dates and issuing entity.