Identifying the Ultimate Beneficial Owners

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CA Mayur Joshi
CA Mayur Joshi
CA Mayur Joshi is a Forensic Accounting evangelist in India. He is the co-founder of Indiaforensic and is author of 7 books on forensic accounting, fraud investigations and money laundering.

In the world of finance, it’s important to know the true owners of businesses and financial transactions. This helps stop illegal activities like money laundering, fraud, and tax evasion. The term “Ultimate Beneficial Owner” or UBO refers to the person or people who actually own or control a company or organization. Finding the UBO is very important to keep everything clear and honest in the financial world. It helps maintain openness and ensures that the financial systems are trustworthy and secure.

What is an Ultimate Beneficial Owner (UBO)?

The Ultimate Beneficial Owner is the person who enjoys the benefits of owning or controlling a company or legal entity, even if they are not listed as the official owner.

some companies or organizations can have complicated ownership setups. They may have many layers of shareholders or people acting on behalf of others, called nominees. This complexity makes it hard to figure out who the real owners are. To address this issue, the concept of the Ultimate Beneficial Owner (UBO) was introduced. The main goal of UBO is to reveal the actual people who have significant control over these companies. By doing so, it helps in fighting financial crimes and making sure that everyone follows the rules and regulations.


The Importance of Identifying UBO

Knowing the UBO is crucial for several reasons:

  1. Transparency and Accountability: Identifying the Ultimate Beneficial Owner (UBO) helps make business structures more transparent. When we know the UBO, it becomes easier to hold real owners accountable for their company’s actions. This means the actual owners are responsible for everything their company does. Transparency in corporate structures ensures that things are clear and everyone knows who is in charge, making companies more accountable for their decisions and actions.
  2. Preventing Money Laundering: Money launderers often hide their illicit funds behind complex ownership structures. Identifying the Ultimate Beneficiary Owner helps expose the beneficial owners and prevents money laundering activities.
  3. Combating Corruption: In many cases, corrupt individuals use hidden ownership to embezzle funds or engage in corrupt practices. Identifying UBOs is a vital step in fighting corruption and also ensuring fair business practices.
  4. Tax Compliance: Knowing the UBO helps tax authorities in tracking the flow of funds. Identifying the owners help them to ensure tax compliance and also reduce tax evasion.

Challenges in Identifying UBO

Identifying the UBO can be a challenging task, especially in cases where there are multiple layers of ownership or the use of nominee shareholders. Some common challenges include:

  1. Nominee Shareholders: Nominee shareholders are individuals who hold shares on behalf of someone else. They may not have any real ownership rights but act as proxies for the actual owners. This ownership makes it difficult to trace the ultimate beneficiaries.
  2. Complex Corporate Structures: When we talk about big companies that also operate in many countries it can get quite complicated to figure out who actually owns the whole network. Generally, these are multinational companies or conglomerates. The reason it’s difficult is that they often have different sections, like smaller companies. Moreover, they are all connected. Some of these parts might even own other companies themselves. This kind of complex setup makes it challenging to identify the main entity that’s really in control of everything.
  3. Offshore Accounts and Trusts: Some entities may use offshore accounts and trusts to further conceal the identity of the UBO. The lack of information on these entities makes it further difficult to track down the real beneficiaries.
  4. Changing Ownership: Ownership of companies may change over time due to mergers, acquisitions, or divestitures, making it essential to update UBO information regularly.

Regulatory Efforts in India

In recent years, India has taken significant steps to improve transparency and combat financial crimes by focusing on UBO identification:

Companies (Amendment) Act, 2019: The amendment brought in new rules that require companies to keep a special register called the Significant Beneficial Ownership (SBO) register. Further, this register is in addition to the existing ones.

These registries already contain information about the company’s members (shareholders), directors, and KMPs. The companies now have the responsibility to find out and also report the individuals who are “significant beneficial owners”.

These are the people who have a substantial interest or control over the company. Even if they may not be listed as official owners they exercise control. The purpose of this new register is to increase transparency and make sure that the actual owners or those in charge are known and reported to the authorities.

Benami Transactions (Prohibition) Act: This Act targets benami properties, where a property is held by someone else on behalf of the real owner. It helps uncover the actual beneficiaries of such properties.

SEBI Regulations: The Securities and Exchange Board of India (SEBI) is an organization that looks after the rules and regulations for the financial markets in India. They have put in place different rules. They ensure everything is transparent in the stock markets. One of the important things they focus on is finding out who the real owners of the companies are. This helps in knowing the actual people who have significant control over these companies. By doing this, SEBI aims to ensure fairness and also honesty in the stock markets and protect the interests of investors and the public.


Identifying the Ultimate Beneficial Owners is crucial for maintaining transparency. Additionally, it helps in preventing financial crimes and ensuring the integrity of India’s financial systems. By implementing robust regulatory measures and also technological solutions, the country aims to strengthen its efforts in UBO identification and contribute to a more transparent and accountable financial environment.

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