Lesson 4 — The Article 5 cascade
Article 5 is a cascade: you work down it, and you stop when you have found the people it points to. Odoone records which limb you used, with its article reference, so an auditor can see why someone was classified as a real beneficiary rather than just that they were.
The click path is short: on the register, open the Real Beneficiaries tab, add the person, and pick the basis under Article 5. That basis is a choice you make and then have to defend, not one the system makes for you.
| Tier | What it captures | The test |
|---|---|---|
| Tier 1 | Ownership or control at the threshold | 25% or more of capital, or 25% or more of voting rights, or control by other means such as the right to appoint or remove a majority of the board |
| Tier 2 | Control that does not show up as a percentage | Control by other means, or suspicion that the recorded owner is not the real beneficiary |
| Tier 3 | The fallback when nobody else qualifies | The Senior Management Officer, where the cascade reaches no one else |
Ownership and voting are tested independently. This is the limb people miss. A person holding 30% of the voting rights and no shares at all qualifies under Tier 1 — the voting test is not a tie-breaker for the ownership test, it is a separate route in. Shareholders' agreements, golden shares and weighted voting classes all live here, and none of them appear on a simple shareholding chart.
Tier 2 can apply even when a Tier 1 person exists. The cascade is not a first-match-wins lookup. If you have a 40% shareholder and you also suspect that a registered 5% holder is fronting for someone else, both facts go on the register. Article 5(5) turns on suspicion; suspicion does not stop being relevant because someone else crossed a threshold.
Which is exactly why the module records your classification instead of computing one. Article 5(2) requires a risk-based approach and Article 5(5) turns on suspicion, and neither can be derived from a shareholding chart by any software ever written. Odoone gives you a place to state the basis and the reasoning, validates that the two are consistent, and stops there. A product that claimed to calculate your real beneficiaries would be claiming to have read your shareholders' agreements and your instincts.
Worked example. Here is the structure of Al Mirfa Contracting LLC, before anything is recorded:
| Holder | Holding | What Article 5 makes of it |
|---|---|---|
| Northline Holdings FZ-LLC | 40% of the capital | Not a natural person — look through it to the people behind it |
| Amina Al Bakri, who owns 70% of Northline | 28% indirectly | Tier 1, capital limb, indirect |
| Layla, Omar and Salma Rahmani, jointly | 30% of the capital | Tier 1, capital limb — and Lesson 5 is entirely about this row |
| Karim Haddad | 25% of the capital | Tier 1, capital limb, exactly at the threshold |
| Noura Sayegh | 5% of the capital | Tier 2, on stated suspicion that she is not the real beneficiary |
| Rashid Al Hosani | 30% of the voting rights, no shares | Tier 1, voting limb |
The indirect arithmetic is worth doing by hand: Northline holds 40% of the company and Amina Al Bakri holds 70% of Northline, so she holds 70% of 40%, which is 28%. That is above 25%, so she is on the register — even though her name appears on no share certificate of the company itself.
The failure mode. "…is recorded on the basis of capital ownership but holds …%" means the basis you chose says ownership while the percentage you typed sits under the threshold. One of the two is wrong. Either correct the percentage, or change the basis to control by other means and say what that control is.