An ultimate beneficial owner refers to individual persons who are the ultimate beneficiary of a company. It can often refer to situations in which ownership or controls are exercised through a chain of ownership, and by means other than direct control. The European Union’s 4th Anti-Money Laundering Directive (4AMLD) addressed Ultimate Beneficial Ownership and classified a UBO as individuals who have a share, voting rights or control of more than 25%.
Specifically, a person that:
- has at least 25% stake in the legal entity’s capital;
- and/or has at least 25% voting right in the general meeting of shareholders
- and/or is a beneficiary of at least 25% of the legal entity’s capital.
When it is not possible to identify specific individuals who meet these requirements, other types of "significant control" can qualify someone as a UBO. For example, if they are a legally registered business Director who exercises significant decision-making power on behalf of the entity. Even though the 25% threshold is the most common, it can vary among jurisdictions and regulatory authorities. In addition, different companies may want to identify persons with a lower share of control.
US, EU, and UK regulators agree that a beneficial owner is someone who owns 25%
or more of the share capital and/or voting rights, although in some higher-risk cases
financial institutions such as banks may set an even lower threshold such as 10%.