Saudi Arabia has taken a major step towards improving corporate transparency by introducing the new Ultimate Beneficial Ownership (UBO) Rules. These regulations, which came into effect on April 3, 2025, require companies to disclose their ultimate beneficial owners, in compliance with international standards such as the Financial Action Task Force (FATF) guidelines. In this blog, we will explore the key aspects of these rules, their impact on businesses and how Analytix can help companies in handling these requirements effectively.
What are the New UBO Rules?
The recently adopted UBO rules aim to promote corporate transparency in Saudi Arabia by establishing a centralized registry of ultimate beneficial owners. An Ultimate Beneficial Owner (UBO) is any individual who directly or indirectly owns at least 25% of a company’s share capital, controls 25% or more of its voting rights, or has considerable power over any corporate decisions made by the company. If no one fits these criteria, the company’s manager or board members may be classified as UBOs.
Key Objectives:
- Promote corporate transparency in Saudi Arabia.
- Avert financial crimes like tax evasion and money laundering.
- Align with FATF recommendations for Saudi Arabia compliance.
Who Needs to Comply?
The UBO rules apply to all companies registered under the Saudi Companies Law, with the exception of publicly listed companies and certain exempt entities like state-owned companies and companies under liquidation under the Bankruptcy Law.
Compliance Requirements
- Disclosure Obligations: Companies must submit their UBO information during incorporation and update it annually.
- Internal Registry: Companies must keep an internal register of BOs.
- Confidentiality: UBO data will be kept confidential and only accessible to regulatory authorities.
Penalties for Non-Compliance
Failure to adhere to these rules will result in penalties of up to SAR 5,00,000. Non-compliance includes failing to disclose UBO information, updating records or confirming details yearly. This highlights the need for timely and accurate reporting.
Exemptions under Saudi UBO Regulations
Certain entities are excluded from these regulations:
- Public joint-stock companies and companies wholly controlled by the Saudi government.
- Companies in liquidation under bankruptcy laws.
- Additional exemptions given by the Ministry of Commerce on a case-by-case basis.
Why are these Rules Important?
The implementation of UBO regulations is a major step towards achieving Vision 2030’s goals, which prioritizes economic diversification and global integration. These rules intend to boost investor confidence and align Saudi Arabia with International standards by promoting corporate transparency and preventing illicit financial activities.
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How can Analytix help?
Complying to regulatory changes can be challenging, particularly for foreign companies operating in Saudi Arabia. That’s where we come in! As industry experts, we offer solutions to help companies like yours to understand how to disclose ultimate beneficial owners in Saudi Arabia, restructure ownership models and ensure compliance with the new rules.
Conclusion
The implementation of Ultimate Beneficial Ownership Rules is a transformative moment for businesses in Saudi Arabia. Companies must quickly act to ensure compliance and prevent penalties for non-compliance with UBO rules in Saudi Arabia.
We, at Analytix, specialize in guiding businesses through regulatory landscapes effortlessly. Whether you need help understanding the beneficial ownership definition in Saudi Arabia or preparing for compliance audit, our team is there for you at every step of the way.
