The terms "beneficiary" or "beneficial owner" are most commonly facilitated and used in the area of offshore business. However, this term also applies to companies with ordinary onshore status. Subject to its translation from French, the term “beneficiary” means a person who is entitled to money payments or, in other words, a recipient of income or benefit from company's operations in the UAE in form of money or in any other form. It should be noted that the meaning of this definition may vary slightly depending on each situation.
In case of ownership of company in the UAE beneficiary is the actual owner of the company, that receives income and other benefits due to his ownership in the company.
In compliance with its definition an individual may be deemed beneficiary if he is directly or indirectly engaged in company's business in the UAE and in fact is the owner of the company.
In practice, beneficiary enjoys the status of owner of the company in the UAE, whereas formally ownership may belong to other persons. Information relating to ultimate beneficiary is confidential and is usually provided only to banking institutions and the agent that is in charge of registration of the company.
Use of services of nominee directors and shareholders in commercial activity of companies in the UAE allows ensuring confidentiality of information related to ultimate beneficiaries. Such ownership, from legal prospective, may be formalized in one of the following ways:
- Nominee agreement
- Trust deed
- Declaration of Trust
In relation to bank account, the concept of beneficiary may have slightly different meaning than the concept of beneficiary of the company. Beneficiary of bank account is an individual who has powers to control financial assets and funds on the bank account. The beneficiary may indirectly (through attorneys) or directly exercise control and management of money. Here, the main emphasis is on the extend of control over the beneficiary's bank account - individual or corporate.
In case of individual account a trustee may manage the account subject to relevant trust agreement.
For example, the right to withdraw money from the accounts or deposit such funds to the account does not constitute an essential element for determining ultimate beneficiary. Ultimate beneficiary can manage a bank account indirectly, i.e. through other persons. However, control and management of bank account still remains the privilege of beneficiary. Such person will be treated by the bank as ultimate beneficiary of such bank account. It is worth mentioning that banking institutions unconditionally require information regarding ultimate beneficiary when opening an account, and therefore relevant information shall be provided.
