Businesses in Saudi Arabia face increasing pressure to provewho truly owns and controls them. Recent regulatory changes have exposed actualgaps in transparency, while making it harder for companies to operate smoothlyand for investors to trust the market.
Even many organizations struggle with complex ownershipstructures, indirect shareholdings, and uncertainty over compliance deadlines.These can also result in costly penalties, reputational damage, and even lostbusiness opportunities.
For you, we have broken down the UBO Rules in SaudiArabia, offering practical solutions to help you with new requirements,avoid fines, and build trust with partners.
What Are the UBO Rules in Saudi Arabia?
The UBO Rules in Saudi Arabia refer to theUltimate Beneficial Ownership regulations introduced by the Ministry ofCommerce, effective from April 3, 2025.
These rules require almost all companies in the Kingdom,except for publicly listed entities and certain government-owned organizations,to disclose and maintain accurate records of their ultimate beneficial owners(UBOs).
The main goal is to enhance corporate transparency, combatfinancial crimes such as money laundering and tax evasion, and align withinternational standards set by the Financial Action Task Force (FATF).
Who Qualifies as a UBO in Saudi Arabia?
UBO Rules in Saudi Arabia define an ultimate beneficialowner as any natural person who meets at least one of the following criteria:
Owns at least 25% of the company’s share capital, directly or indirectly
Controls at least 25% of the voting rights in the company, directly or indirectly
Has the right to appoint or remove a majority of the board of directors, manager, or president
Exerts significant influence over company decisions or business activities
Acts as a representative of any legal person meeting the above criteria
If no individual can be identified using these criteria, thecompany’s manager, board members, or president will be considered the UBO.
Also Read: The Importance of Organization Structure in Saudi Arabia
Compliance Requirements Under UBO Rules in Saudi Arabia
To comply with the UBO Rules in Saudi Arabia, companiesmust fulfill several obligations:
New companies must disclose UBO information and supporting documentation during the incorporation process.
All companies must confirm and update UBO information annually, at least 30 days before the anniversary of their registration.
Any changes in UBO status must be reported to the Ministry of Commerce within 15 days.
Companies must keep an updated register of UBOs and related documents, available for inspection by authorities.
The Ministry of Commerce can request UBO information at any time, and companies must respond within 30 days.
Exemptions: Publicly listed companies, wholly government-ownedentities, and companies in insolvency proceedings are exempt but must provideevidence of their exemption.
Penalties for Non-Compliance with UBO Rules in Saudi Arabia
Failure to comply with the UBO Rules in Saudi Arabia canresult in severe consequences, including:
Fines up to SAR 500,000 (approximately USD 133,000)
Potential reputational damage and increased regulatory scrutiny
Risk of business disruption or loss of investor confidence
Why UBO Rules in Saudi Arabia Matter for Businesses
The implementation of UBO Rulesin Saudi Arabia is a critical step toward preventing financial crime and increasingtransparency. Also, authorities can better detect and deter money laundering,terrorist financing, and tax evasion.
These annual leave rules bring Saudi Arabia inline with FATF recommendations and similar regulations in other jurisdictions. Itis also playing an important role in boosting investor confidence. These typesof transparent ownership structures make the Kingdom more attractive to foreigninvestors and support the goals of Saudi Vision 2030.
Practical Steps for UBO Compliance in Saudi Arabia
To successfully comply with the UBO Rules in SaudiArabia, businesses should:
Audit ownership structures
Implement tracking systems
Train staff for reporting
Consult with legal experts
Prepare documentation for audits
Summarized UBO Rules in Saudi Arabia:
| Requirement | Details |
|---|---|
| UBO Definition | 25%+ ownership, voting rights, board control, or influence |
| Disclosure Timing | At incorporation, annually, and within 15 days of changes |
| UBO Register | Mandatory, must be updated and available for inspection |
| Exemptions | Publicly listed, government-owned, insolvency proceedings |
| Penalties for Non-Compliance | Up to SAR 500,000 fine |
| Authority | Ministry of Commerce |
Common Challenges and How to Overcome Them
Many companies struggle with:
Use professional services to map indirect ownership and identify UBOs.
Set up reminders and internal controls to ensure timely reporting.
Regularly consult Ministry updates and seek legal guidance to interpret grey areas.
Conclusion
The UBO Rules in Saudi Arabia represent amajor shift in corporate transparency and compliance.
By understanding the requirements, maintaining accuraterecords, and responding promptly to changes, businesses can avoid penalties andbuild a reputation for integrity.
Proactive compliance not only protects companies fromregulatory risk but also strengthens their standing with partners, investors,and authorities.
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