UBO Rules in Saudi Arabia:
What They Are and Why They Matter

Businesses in Saudi Arabia face increasing pressure to prove who truly owns and controls them. Recent regulatory changes have exposed actual gaps in transparency, while making it harder for companies to operate smoothly and for investors to trust the market.

Even many organizations struggle with complex ownership structures, indirect shareholdings, and uncertainty over compliance deadlines. These can also result in costly penalties, reputational damage, and even lost business opportunities.

For you, we have broken down the UBO Rules in Saudi Arabia, 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 the Ultimate Beneficial Ownership regulations introduced by the Ministry of Commerce, 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, combat financial crimes such as money laundering and tax evasion, and align with international 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 beneficial owner 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, the company’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, companies must 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-owned entities, and companies in insolvency proceedings are exempt but must provide evidence of their exemption.

Penalties for Non-Compliance with UBO Rules in Saudi Arabia

Failure to comply with the UBO Rules in Saudi Arabia can result 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 Rules in Saudi Arabia is a critical step toward preventing financial crime and increasing transparency. Also, authorities can better detect and deter money laundering, terrorist financing, and tax evasion.

These annual leave rules bring Saudi Arabia in line with FATF recommendations and similar regulations in other jurisdictions. It is also playing an important role in boosting investor confidence. These types of transparent ownership structures make the Kingdom more attractive to foreign investors and support the goals of Saudi Vision 2030.

Practical Steps for UBO Compliance in Saudi Arabia

To successfully comply with the UBO Rules in Saudi Arabia, 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:

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 a major shift in corporate transparency and compliance.

By understanding the requirements, maintaining accurate records, and responding promptly to changes, businesses can avoid penalties and build a reputation for integrity.

Proactive compliance not only protects companies from regulatory risk but also strengthens their standing with partners, investors, and authorities.

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