Do You Own Exactly 25%? Under the New Rules, You’re a UBO

One word changed, and it caught a lot of shareholders off guard. The EU moved the beneficial-ownership test from “more than 25%” to “25% or more.” Sitting on precisely a quarter of the shares used to keep you off the register; now it puts you on it. And in high-risk sectors, the line drops as low as 15%.

This is our practitioner’s read on who the new threshold captures, why control counts and not just equity, and why documenting your reasoning is no longer optional but a legal duty in its own right.

The One-Word Change and Why It Matters

Under the old test, a beneficial owner held “more than 25%” — so a shareholder with exactly 25.0% fell just outside the definition, and structures were sometimes arranged to land people precisely on that safe side of the line. The AMLR closes that door. The threshold is now “25% or more,” which means a stake of exactly 25% is sufficient to meet the test, as Baker McKenzie reads the new rules.

The shift sounds pedantic and is anything but. Quarter-stake shareholders who were deliberately or accidentally kept at 25% to stay off the register are now inside it. Now to the harder point: equity is only the starting line, not the finish.

Voting Rights and “Effective Control”

The threshold test looks at shares or voting rights, and the two are not always the same. A shareholder can hold 20% of the equity but control a larger share of the votes through a dual-class structure or a shareholders’ agreement; conversely, someone with modest equity may exercise control through veto rights, board appointment powers, or contractual arrangements. Beneficial ownership follows control, not just the number on the share certificate. Check our article about corporate structuring to see what has to be done.

This is where “effective control” enters. The AMLR framework requires you to identify the natural person who ultimately owns or controls the entity, which captures control exercised by means other than direct shareholding. Nevertheless, the equity threshold remains the first filter — you run the 25%-or-more test, then you ask whether anyone controls the company through other means even if their equity sits below the line. Both questions have to be answered, not just the tidy one.

High-Risk Sectors and the 15% Line

The 25% figure is not universal. In high-risk sectors, the AMLR allows the threshold to be reduced to as low as 15%, so the line that captures a beneficial owner depends on what the company does. A shareholder comfortably below 25% in an ordinary business could be a UBO in a sector the framework treats as higher risk.

The practical consequence is that you cannot determine your UBOs from the cap table alone — you need the cap table and the sector classification together. But this is not a reason for paralysis; it is a reason to check the sector treatment before you conclude that a sub-25% holder is outside the definition. A holder at 18% is safe in a standard business and potentially a UBO in a high-risk one, and only the sector tells you which.

Recording Why You Included or Excluded Each Person

Here is the part that changes daily practice most. The AMLR does not merely ask for the list of beneficial owners; it requires entities to document the complete identification process, including the reasoning for including or excluding each individual as a UBO. The output is no longer just a name — it is a name plus the analysis that produced it.

For a company, that means keeping a record: who was assessed, what their equity and control looked like, which threshold applied given the sector, and why each person did or did not make the list. Meanwhile, this duty is also a shield — a well-documented determination is your defence if a supervisor or bank later questions why someone was excluded. To sum up, the discipline the AMLR imposes is to treat UBO identification as a reasoned analysis you can produce on request, not a box you tick and forget. As a comparison point, the UAE already runs a three-tier test — ownership, then control, then senior management — under Cabinet Resolution No. 109 of 2023, a reminder that laddered, documented analysis is becoming the global norm, not an EU quirk.

FAQ

If I own exactly 25%, am I a UBO under the new EU rules?

Yes. The AMLR uses a “25% or more” test, so a stake of exactly 25% now meets the threshold. Under the old “more than 25%” test, exactly 25% fell just outside.

Does the threshold ever drop below 25%?

Yes. In high-risk sectors the AMLR allows the threshold to be reduced to as low as 15%, so the applicable line depends on what the company does.

Can I be a UBO with less than 25% equity?

Yes. Beneficial ownership follows control as well as shares. Voting rights, veto powers, board-appointment rights or contractual control can make you a UBO even below the equity threshold.

What does the documentation duty require?

The AMLR requires you to record the full identification process — who was assessed, the thresholds applied, and the reasoning for including or excluding each person — not just the final list of names.

How does the EU test compare to the UAE?

The UAE uses a three-tier test under Cabinet Resolution No. 109 of 2023: ownership or control of 25% or more, then whoever otherwise controls, then senior management. Both regimes reward laddered, documented analysis.

Conclusion

The move from “more than 25%” to “25% or more” is a one-word change with real reach: shareholders sitting on exactly a quarter are now beneficial owners, high-risk sectors can pull the line down to 15%, and control can make a UBO of someone below any equity threshold. Layered on top is a duty to document the reasoning behind every inclusion and exclusion. Treat UBO identification as a reasoned, recorded analysis — cap table plus control plus sector — and you meet the new standard instead of being caught by it.

Unsure whether a 25% shareholder, a voting arrangement, or your sector puts someone on your UBO register? Send us your cap table and a line on what the company does, on Telegram or WhatsApp, and we will run the determination and hand you a documented UBO analysis that stands up to a bank or a supervisor.