The Minister of Commerce, Dr. Majid Al-Qasabi, has approved the rules for the ultimate beneficiary, which will come into effect on 4th March 2025. The aim of these rules is to enhance transparency in companies, create a database to register and store ultimate beneficiary data, and promote compliance with international requirements. The rules were developed in collaboration with specialized experts and in accordance with the recommendations of the Financial Action Task Force (FATF) and international best practices.
The ultimate beneficiary is defined as a natural person who owns at least 25% of the company’s capital directly or indirectly, controls at least 25% of the total voting rights in the company directly or indirectly, has the authority to appoint the company’s manager or a majority of its board members or president, or has the power to influence the company’s operations or decisions directly or indirectly. If none of these criteria are met, the company’s manager, board member, or president may be considered the ultimate beneficiary.
These rules apply to companies governed by the Companies Law, including foreign companies operating in the Kingdom, with the exception of publicly listed joint-stock companies. Companies owned entirely by the state or one of its legal entities, as well as companies undergoing insolvency proceedings under the bankruptcy law, are also exempt from the requirement to disclose ultimate beneficiary data.
Company founders are required to disclose ultimate beneficiary data when applying for incorporation, while existing companies must disclose this information within a specified timeframe leading up to the annual confirmation of registered data with the commercial registry. Companies are obligated to provide updates on any changes to the ultimate beneficiary data to the Ministry, maintain a special record in the company for this data, and annually confirm the accuracy of the ultimate beneficiary data to the Ministry at no cost to the company or the ultimate beneficiary.
The rules emphasize the confidentiality of data and the prescribed retention period. Access to this data is restricted to regulatory authorities and relevant entities as per applicable laws. Companies that violate the ultimate beneficiary rules may face fines of up to 500,000 Saudi Riyals or alternative penalties as stipulated in the Companies Law and its executive regulations.
