Penalties for Non-Disclosure of Beneficial Owner Information

On 13/08/1446 AH, the Minister of Commerce issued Resolution No. (235), mandating companies to identify the beneficial owner; with the aim of enhancing transparency in accordance with international standards and establishing a comprehensive database for the registration and preservation of beneficial owner information.

Pursuant to this resolution, companies are required to create a dedicated register of beneficial owners’ information and update it periodically, while providing annual confirmation of the accuracy of such information.

The provisions of this resolution shall be effective from 05/10/1446 AH (corresponding to April 03, 2025), and shall apply to all companies subject to the Saudi Companies Law, Except for joint-stock companies listed on the financial market.

Who is the Beneficial Owner?

The resolution defines the beneficial owner as the natural person who exercises actual control or influence over the company, based on the five criteria specified in the resolution, including:

• Holding 25% or more of the capital or voting rights, whether directly or indirectly.
• The ability to influence the company’s decisions, including the appointment or removal of directors or the majority of the board members.
• Any natural person who exercises substantial authority or influence over the company’s operations, whether directly or indirectly.

Which Companies Are Exempt from Disclosing Beneficial Owner Information?

The following companies are exempt from the requirement to disclose beneficial owner information:

1. Companies wholly owned by the state or any of its legal entities, whether directly or indirectly.
2. Companies subject to liquidation under the Bankruptcy Law issued by Royal Decree No. (M/50) dated 28/05/1439 AH.
3. The Minister may; by resolution, exempt from the requirements to disclose beneficial owner information.

What Are the Obligations of Companies Subject to These Rules?

1. Taking necessary measures to identify the beneficial owner, obtaining supporting information and documents, and updating them upon any change.
2. Preparing a dedicated register for recording the beneficial owner information, including supporting documents for the disclosed information, and any amendments or changes thereto, to be maintained within the Kingdom.
3. Submitting a request to the Ministry to update the disclosed information, including the reasons within (15) days of any change.
4. Submitting an annual confirmation of the disclosed information to the Ministry. The due date for submitting the confirmation shall be upon the completion of each year from the company’s registration in the commercial register. The confirmation may be submitted up to (30) days before the due date.

Additional Obligations:

• Founders must disclose beneficial owner information upon the company’s incorporation request.
• Existing companies at the time of the resolution’s enforcement are obligated to disclose beneficial owner information to the Ministry within the deadline for the annual confirmation.
• If a company is exempt from the disclosure requirement, it must submit supporting documentation to the Ministry as proof of exemption.

What Are the Penalties that may be imposed on Non-Compliant companies?

Penalties that may be applied to Companies violating the resolution range from imprisonment for up to three years and a financial fine of up to 5 million SAR. Additional penalties may also be imposed, such as warnings or requiring the company to take corrective actions.

Ensure Your Company’s Legal Compliance

Avoid penalties and ensure full compliance with regulations by consulting our legal experts. We offer:

• Preparation and updating of the Ultimate Beneficial Owner (UBO) register in accordance with the Ministry of Commerce requirements.
  • Legal advisory services to ensure compliance with Saudi regulations.
  • Representation of companies before regulatory authorities when needed.
  • Training of internal teams on compliance and governance requirements.
  • Legal solutions to address violations and prevent penalties.

Don’t leave your company exposed to legal risks. Contact us today to ensure full compliance and safeguard your business.

📞 Waleed Othman
Head of Investment & Transactions
📧 [email protected]

Mahitab Ajlan
Associate Lawyer
📧 [email protected]