UBO Advisory
UBO Advisory
UBO stands for Ultimate Beneficial Owner; the natural person who ultimately benefits from, has an interest in or controls a business or organisation. To be identified as UBO, a person should
UBO stands for Ultimate Beneficial Owner; the natural person who ultimately benefits from, has an interest in or controls a business or organisation. To be identified as UBO, a person should
The Ultimate Beneficial Owner (UBO) is a critical concept in corporate governance and regulatory compliance. It refers to the natural person who ultimately benefits from, has an interest in, or controls a business or organization. Identifying the UBO is essential for transparency, accountability, and combating financial crimes like money laundering and fraud. The criteria for determining a UBO typically include the following.
- Ownership of Shares or Voting Rights: A person can be identified as a UBO if they own more than 25% of the shares or voting rights in a company. This means they have a significant level of control over decision-making within the organization.
- Ownership Percentage: If a person holds more than 25% of the ownership in the company, they can also be classified as a UBO. This indicates a substantial financial interest in the organization.
- Effective Control: UBO status can be assigned to someone who exercises effective control over the company or entity, even if they don’t hold a specific ownership percentage. This may include individuals who influence strategic decisions, operations, or financial activities.
- Entitlement to Profits: If a person is entitled to 25% or more of the profits generated by the company, they can be considered a UBO. This indicates a significant financial interest in the success of the business.
- Special Control over Capital: Individuals who hold special control over at least 25% of the capital of the company, even without direct ownership, may also be categorized as UBOs. This recognizes their influence on the organization’s financial resources.
Multiple UBOs: It’s important to note that a company can have more than one UBO. This often occurs in complex ownership structures where multiple individuals or entities have significant interests in the organization. Each UBO should be identified and documented.
Pseudo-UBO: In cases where, based on the above criteria, no specific UBO can be determined, regulations may require the identification of a statutory director or partner as a ‘pseudo-UBO.’ This person is essentially a placeholder UBO designated to ensure compliance with transparency and regulatory requirements. It’s important to understand that a pseudo-UBO may not have the same level of financial interest or control as a typical UBO.
Identifying and documenting UBOs is crucial for regulatory compliance and transparency in business operations. It helps authorities and stakeholders understand who ultimately benefits from, controls or has a significant interest in an organization, which is essential for maintaining the integrity of financial systems and preventing illicit activities.