Saudi Arabia has taken a significant step toward enhancing business transparency and accountability by implementing new regulations concerning Ultimate Beneficial Ownership (UBO). These regulations, which came into effect on April 3, 2025, require companies to clearly identify the individuals who ultimately own or control them. This initiative aligns with global best practices, such as those set forth by the Financial Action Task Force (FATF).
In this article, we will outline the key aspects of the new regulations, their implications, and how Arab Dreams can assist your business in ensuring compliance without difficulty.
What Are the UBO Regulations?
In essence, the UBO regulations require companies in Saudi Arabia to disclose the true owners or controllers of the business, even if their involvement is not immediately visible.
An Ultimate Beneficial Owner (UBO) is defined as an individual who:
- Owns 25% or more of the company
- Holds 25% or more of the voting rights
- Exercises significant influence over the company’s decisions
In cases where no individual meets these criteria, the company’s manager or board members may be listed as the UBOs.
Why Are These Regulations Important?
The objectives of the new UBO regulations are as follows:
- To enhance transparency within the Saudi business landscape
- To combat financial crimes, including tax evasion and money laundering
- To ensure Saudi Arabia adheres to international standards
- To support Vision 2030 by fostering trust and attracting global investors
Who Is Affected by These Regulations?
The UBO regulations apply to nearly all companies registered under Saudi law, with the following exceptions:
- Publicly listed companies
- Entities wholly owned by the Saudi government
- Businesses undergoing liquidation or bankruptcy
- Other entities specifically exempted by the Ministry of Commerce
What Do Companies Need to Do ?
To comply with the UBO regulations, businesses must:
- Submit UBO information during company registration and update it annually
- Maintain a private, internal record of UBOs
- Keep UBO data confidential, sharing it only with relevant government authorities
Consequences of Non-Compliance
Companies that fail to comply with the UBO regulations may face fines of up to SAR 500,000. Non-compliance includes:
- Failing to provide UBO details
- Neglecting to update the UBO information
- Not confirming UBO information on an annual basis
- To avoid penalties, it is crucial for businesses to ensure they meet these requirements in a timely manner.
How Arab Dreams Can Assist ?
We understand that navigating new regulations, particularly in a foreign country, can be challenging. Arab Dreams is here to provide comprehensive support to businesses seeking to comply with the new UBO regulations.
Our services include:
- Guiding businesses through the new UBO requirements
- Assisting with the completion of necessary documentation
- Helping restructure company ownership, if necessary
- Ensuring full compliance to avoid fines and penalties
