Understanding the Ultimate Beneficiary Owner
The ultimate beneficiary owner is the person or persons who legally own or control the business either directly or indirectly. The term “ultimate” is used because the ultimate beneficiary owner is the designee(s) who ultimately receive profits from the business.
By understanding the ownership structure of a company and who exerts controlling interest over it from both a financial and governance perspective, potential investors or business partners are enabled to make better judgments about the company’s operations, performance, and future prospects.
When you begin your research and due diligence work for establishing a business relationship with a Chinese company, you’ll encounter several terms, forms, processes, and procedures that are associated with your inquiry. One important term is the “ultimate beneficiary owner” (UBO) of a company or enterprise. The ultimate beneficiary owner is the person or persons who legally own or control the business either directly or indirectly. The term “ultimate” is used because the ultimate beneficiary owner is the designee(s) who ultimately receive profits from the business. The designee(s) exert significant influence over the company, hold at least 25% of the shares or votes, and is/are ultimately responsible for the business.
Location: Where to find the UBO
As we’ve explored in other articles and knowledge pieces, there are numerous forms, documents, and other materials that comprise the portfolio of required components to establish a legal, sustainable relationship with a Chinese company. The primary document on which you’ll find the ultimate beneficiary owner listed is the Chinese annual return. That document includes detailed information about many aspects of the company’s corporate and governance structure.
Verification: How to verify the UBO
As with all Chinese documents, you should take steps to ensure that the person or persons listed as the ultimate beneficiary owner is official and valid.
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