What is the 25% rule for beneficial ownership in the UAE?
The 25% rule is the ownership threshold used to identify the real, or ultimate, beneficial owner of a UAE legal person. The beneficial owner is the natural person who ultimately owns or controls the company, and a person is treated as such where they own or control, directly or indirectly, twenty-five per cent or more of the company’s capital, or hold equivalent voting or controlling rights.
Where no natural person meets the 25% ownership test, or there is doubt that such a person is the true controller, the law moves to a control test, looking at who otherwise exercises control. If no one is identified even then, the natural person holding the position of senior management officer is deemed the beneficial owner. The point of the cascade is to ensure a named individual is always identified, so ownership cannot be hidden behind corporate layers.
Legal Reference (UAE):
· Cabinet Resolution No. 109 of 2023 on Real Beneficiary Procedures, Article 5 - the 25% ownership threshold and the control and senior-management fallback tests.
For more details, consult the full text of Cabinet Resolution No. 109 of 2023 or seek guidance from your AML compliance officer.