Navigating Saudi Arabia's New UBO Regulations: A Comprehensive Guide for Businesses

As global efforts to combat financial crime and improve corporate transparency grow stronger, Saudi Arabia has implemented new regulations focused on Ultimate Beneficial Ownership (UBO). These rules require all companies to identify and report individuals who ultimately own or control them.

UBO details must be submitted during Commercial Registration (CR) renewal or on the anniversary of CR issuance for companies with multi-year registrations. This measure enhances accountability, aligns with international standards, and ensures businesses operate within a transparent legal framework.

This guide explains what UBO means, who must comply, and how companies can meet these requirements to avoid penalties and ensure regulatory readiness

What is an Ultimate Beneficial Owner (UBO)?

An Ultimate Beneficial Owner (UBO) is defined as any individual who ultimately owns or controls a company. Under the guidelines, an individual is considered a UBO if they meet any of the following criteria:

• Owns at least 25% of the company’s share capital, directly or indirectly.

• Controls at least 25% of the company’s total voting rights, directly or indirectly.

• Has the power to appoint or dismiss the company’s manager, the majority of its board members, or the chairman, directly or indirectly.

• Has the ability to influence the company’s business or decisions, directly or indirectly.

• Represents a legal entity that meets any of the criteria above.

If no individual satisfies any of the criteria, the company’s manager, board member, or chairman shall be deemed the beneficial owner.
 

Mandatory UBO Compliance Requirements

To comply with the regulation, companies are required to maintain a UBO Register and submit specified information. The minimum mandatory details include:

• Full name of the beneficial owner

• National ID, Resident ID, or passport number (for non-Saudis)

• National address or residence address

• Mobile number and email address, if available

• Description and criteria verifying the person as the beneficial owner, including the date of verification

Submission Timeline
Companies must submit UBO information:
    •    At the time of Commercial Registration (CR) issuance,
    •    At the time of CR renewal, or
    •    On the anniversary of the CR issuance if the CR is valid for multiple years.

In addition, newly formed companies are required to submit UBO details as part of their initial setup process. This means that during the incorporation and licensing phase, businesses must identify and register their Ultimate Beneficial Owners with the Ministry of Commerce. This ensures that transparency is established from the very beginning of a company’s lifecycle. Failure to provide this information at the time of formation may delay the registration process or result in compliance issues.

Furthermore, if there are any changes to the UBO details, companies must update the Ministry accordingly.

Entities Exempt from UBO Disclosure

Not all businesses are subject to these requirements. The following are exempt:

• A company fully owned by the Saudi state or one of its legal entities, directly or indirectly

• A company undergoing liquidation procedures under the Bankruptcy Law (Royal Decree No M/50 dated 5/28/1439 AH)

Even exempt entities are advised to confirm their status with the relevant authorities to ensure accurate classification.
 

Consequences of Non-Compliance

Failure to comply with the UBO regulations may lead to:

• Regulatory penalties for non-disclosure or delayed disclosure

• Suspension or disruption of commercial registration renewal

• Legal complications or additional scrutiny from government bodies

• Reputational risks affecting relationships with stakeholders and financial institutions

Steps to Ensure UBO Compliance

1. Identify and Document UBOs
Review your company’s ownership and governance structure to identify individuals who meet the UBO criteria.

2. Maintain a UBO Register
Establish and update an internal register that contains all required UBO information.

3. Submit Accurate and Timely Data
Provide the UBO information at CR renewal or on its anniversary. Ensure timely updates in case of changes.

4. Educate Staff
Train your compliance and administrative teams on UBO requirements and the importance of maintaining accurate records.

5. Consult Professional Advisors
If your ownership structure is complex, seek guidance from legal or compliance professionals to ensure correct interpretation and reporting.
 

Frequently Asked Questions (FAQs)

Q1: When must UBO details be submitted?
UBO details must be submitted at the time of CR renewal or on the anniversary of CR issuance if the CR is valid for multiple years.

Q2: What if no one meets the UBO criteria?
The company’s manager, board member, or chairman will be deemed the beneficial owner by default.

Q3: Are foreign-owned companies required to comply?
Yes, unless they fall under the exemption categories specified.

Q4: What documentation is needed for exempt entities?
Exempt companies must still confirm their status and may need to submit proof to the Ministry of Commerce.

Q5: What happens if UBO details change during the year?
Companies are required to notify the Ministry of any changes to UBO information, ensuring the register remains accurate.

The UBO regulations introduced in Saudi Arabia reflect the Kingdom’s commitment to transparent corporate governance and responsible financial oversight. By understanding the UBO criteria and maintaining compliance with disclosure requirements, businesses can avoid regulatory complications and position themselves as trustworthy, well-governed entities.

Timely and accurate compliance with these regulations not only prevents penalties but also reinforces investor confidence and long-term business integrity.
 

Work with TASC Outsourcing to Stay Compliant in Saudi Arabia

If you're setting up or growing your business in Saudi Arabia, let TASC Outsourcing help you do it right. We have over 17 years of experience in HR and supporting companies across the GCC.

Contact TASC Outsourcing today. We’ll help you stay compliant and grow your business the smart way.