Saudi Arabia's 2025 UBO Regime: What's New

Overview

Saudi Arabia has introduced comprehensive beneficial ownership regulations that come into effect in April 2025. These regulations align with international standards and represent a significant shift in the Kingdom's approach to corporate transparency.

Key Changes

Expanded Scope

The new regime applies to a broader range of entities, including:

• All commercial entities registered in Saudi Arabia
• Foreign entities with significant presence in KSA
• Partnerships and joint ventures
• Trusts and similar arrangements

Lower Thresholds

The beneficial ownership threshold has been reduced from 25% to 10% for certain categories of entities, requiring more detailed ownership disclosure.

Enhanced Reporting Requirements

Entities must now file beneficial ownership information through the Ministry of Commerce's online portal, with mandatory updates within 30 days of any changes.

Beneficial Owner Definition

Under the new regime, a beneficial owner is defined as a natural person who:

• Owns directly or indirectly 10% or more of the entity's capital or voting rights
• Exercises ultimate control over the entity
• Has the right to appoint or remove a majority of directors or managers
• Exercises significant influence or control through other means

Registration and Filing Obligations

Initial Registration

All affected entities must register their beneficial owners by April 2025, providing:

• Full name, nationality, and date of birth
• Residential address and contact information
• National ID or passport number
• Nature and extent of beneficial interest
• Supporting documentation

Ongoing Obligations

Entities must update their beneficial ownership information within 30 days of any changes, including changes in ownership percentages, new beneficial owners, or changes in control structures.

Compliance Timeline

• January 2025: Regulations published and guidance issued
• February-March 2025: Preparation period for entities
• April 2025: Mandatory registration deadline
• Ongoing: Continuous monitoring and updates required

Penalties for Non-Compliance

Failure to comply with the new UBO requirements may result in:

• Administrative fines up to SAR 1,000,000
• Suspension of commercial registration
• Criminal penalties for willful non-compliance
• Restrictions on business operations

Practical Considerations

For Existing Entities

Existing entities should immediately begin:

• Identifying all beneficial owners under the new definitions
• Gathering required documentation
• Preparing for online registration
• Establishing procedures for ongoing updates

For New Entities

New entities must register beneficial owners as part of the incorporation process, ensuring compliance from day one.

Integration with Other Requirements

The new UBO regime must be considered alongside:

• AML and KYC obligations
• Tax reporting requirements
• Foreign investment regulations
• Corporate governance requirements

Conclusion

Saudi Arabia's 2025 UBO regime represents a significant step toward greater corporate transparency. Entities operating in or with connections to KSA must act now to ensure compliance by the April 2025 deadline. Early preparation and professional guidance will be essential for navigating these new requirements.