Nominee arrangements — where one person holds shares or a directorship on behalf of another (the “principal”) — are used in UAE company structures for privacy, succession planning, or simplifying complex ownership chains. Here is what you need to know about nominees in UAE companies.
Are UAE Nominees Legal?
Nominee arrangements are legal in the UAE but are subject to strict UBO (Ultimate Beneficial Owner) disclosure requirements. Since Cabinet Decision No. 58 of 2020, all UAE companies must: disclose all nominees to the relevant authority, maintain a Register of Nominees at the company’s registered address, and identify the ultimate principal behind each nominee in the UBO Register. A nominee who is not disclosed in the UBO Register is not a legal “hidden” nominee — it is an undisclosed beneficial owner, which violates UAE AML/CFT regulations.
Nominee Director in UAE Free Zones
A nominee director holds the directorship position in the company’s public records but acts on instructions from the principal under a Declaration of Trust or Nominee Agreement. This is permitted in DMCC, IFZA, and most UAE free zones, provided the nominee is disclosed to the free zone authority as directed through the UBO/nominee register. DIFC and ADGM: nominee directors must be disclosed under their respective Companies Laws.
Nominee Shareholder in UAE Free Zones
A nominee shareholder holds shares on behalf of the real owner under a Declaration of Trust. The nominee’s name appears on the trade licence and shareholder register, but the beneficial ownership belongs to the principal. The principal must still be disclosed in the UBO Register if they own 25%+ beneficially. Nominee shareholding without UBO disclosure: AED 100,000 fine per violation.
Risks of Using Nominees
- The nominee has legal title to shares — a dishonest nominee could attempt to sell or pledge shares without authority (mitigated by a well-drafted Declaration of Trust)
- UAE banks now routinely look through nominee layers to identify UBOs — accounts may be refused if UBO is not clearly identified
- Nominees create additional KYC complexity for bank account opening