What are the new requirements and who does it apply to? 

The key new requirements under the UBO Rules include the following: 

• New Company Formations: companies formed after the UBO Rules come into effect will be required to disclose details of their UBO to the Ministry of Commerce as part of the formation process.
• Register and Reporting for new and existing companies, each must:
  • maintain a UBO register (in the Kingdom of Saudi Arabia); 
  • notify the Ministry of Commerce in the event there is any change to such information within fifteen (15) calendar days of such change; and 
  • disclose or confirm their ultimate beneficial owners in their next annual filings with the Ministry of Commerce (on an annual basis within thirty (30) days before the anniversary of the date of formation).
• Exempt companies must evidence their exemption to the Ministry of Commerce.

The Ministry of Commerce may request disclosure of any information relating to the relevant UBO. Currently, it remains unclear what these requests may entail, however, the UBO Rules contemplate the Ministry producing a supplementary guideline to further clarify the relevant processes and implementation of the UBO Rules.

How do the UBO Rules define an "ultimate beneficial owner"?

The UBO Rules define an “ultimate beneficial owner” as any natural person (or a representative of any natural person), who directly or indirectly:

1. owns at least 25% of the company’s share capital;
2. controls at least 25% of the voting shares in the company;
3. is entitled to appoint or remove a majority of the company’s board of directors, its manager or president; or
4. has the ability to influence decision-making or the business of the company.

The UBO Rules also provide that in scenarios where an ultimate beneficial owner cannot be identified by applying the foregoing criteria, a company’s director, board member, or chairman will be recognised as the real beneficiary.

Who is exempt?

The UBO Rules provide for certain exemptions with respect to:

1. listed joint-stock companies;
2. companies wholly owned by the state or any state-owned authorities whether directly or indirectly;
3. companies undergoing liquidation as per the Bankruptcy Regulations; and
4. companies exempted by way of Ministerial resolution, giving the Ministry of Commerce broad discretion in exempting companies.

When do the UBO Rules come into effect? 

The UBO Rules come into effect on 5 Shawwal 1446H (corresponding to 3 April 2025G). 

Penalties for failure to comply with the UBO Rules: 

Companies found in breach of the UBO Rules can face fines of up to SAR500,000 ($133,000).

Further Guidance by the Ministry of Commerce:

To assist in the transition and ensure compliance, the Ministry of Commerce is in the process of publishing a user guide with respect to the UBO Rules. This guide is intended to aid founders, partners, shareholders, or the companies in understanding the procedures and measures necessary for acquiring and recording the real beneficiary's data, tailored to the specific nature of the company. 

This initiative is a clear indication of the robust approach being taken to implement these significant changes, reflecting Saudi Arabia's dedication to maintaining transparency, the integrity of its commercial sector and its alignment with international standards. All KSA investors ought to consider establishing internal protocols to ensure full compliance with these UBO Rules.