In recent years, Saudi Arabia has taken strong steps to improve corporate transparency, prevent financial crimes, and align with international standards. One of the most impactful developments is the introduction of the new Ultimate Beneficial Ownership (UBO) law in Saudi Arabia. This law mandates that all businesses registered in the Kingdom must disclose accurate information about their ultimate beneficial owners, ensuring that the true individuals behind corporate entities are clearly identified.
Whether you are a foreign investor, business owner, or corporate advisor, understanding the new UBO regulations in Saudi Arabia is now essential for staying compliant and avoiding penalties.
What Is Ultimate Beneficial Ownership (UBO)?
The term Ultimate Beneficial Ownership (UBO) refers to the natural person or persons who ultimately own or control a company, either directly or indirectly. These individuals benefit from the company’s profits and have significant influence over its operations.
A UBO is typically someone who:
- Owns 25% or more of shares or voting rights
- Exercises control through other means, such as influence or management roles
- Benefits from the assets or income of the business, even if not officially listed
The new UBO law in Saudi Arabia ensures that the authorities and regulators can easily trace the actual persons behind any business activity.
Why Is the UBO Law Important in Saudi Arabia?
The UBO law in Saudi Arabia is important because it boosts business transparency, helps fight money laundering, and aligns with global compliance standards. It ensures authorities know who truly owns and controls a company. This builds trust, protects investors, and strengthens the country’s reputation as a secure place to do business.
Enhancing Corporate Transparency
The UBO regulations in Saudi Arabia increase transparency across the business sector, discouraging money laundering, tax evasion, and fraudulent ownership structures.
Strengthening Anti-Money Laundering (AML) Efforts
By requiring detailed disclosure of beneficial owners, the new law supports Saudi Arabia’s national strategy against money laundering and terrorist financing, aligning with FATF (Financial Action Task Force) standards.
Improving Investor Confidence
Clear ownership structures reduce risk and enhance the Kingdom’s attractiveness to foreign investors by ensuring legal clarity and corporate accountability.
Complying with Global Business Standards
Saudi Arabia is committed to creating a transparent and investor-friendly environment, and the UBO disclosure requirements help the country comply with international corporate governance standards.
Who Must Comply with the UBO Law in Saudi Arabia?
All legal entities registered with the Saudi Ministry of Commerce (MoC) must comply with the new UBO disclosure rules, including:
- Limited Liability Companies (LLCs)
- Joint Stock Companies (JSCs)
- Professional Companies
- Holding Companies
- Foreign Company Branches
- Joint Ventures (if registered under Saudi law)
Public entities, government-owned companies, and certain licensed financial institutions may be subject to different rules or exemptions.
Key Requirements of the UBO Law in Saudi Arabia
Under the new UBO regulations, companies must accurately identify and report the ultimate beneficial owner(s) to the Ministry of Commerce and/or relevant authorities.
Disclosure of Beneficial Ownership Details
Companies are required to submit:
- Full name of each UBO
- Nationality and ID or passport number
- Residential address and contact information
- Percentage of ownership or control
- Method of ownership or influence (direct or indirect)
Ongoing Updates and Accuracy
If there are any changes in ownership, management, or control, companies must update the UBO register within a specified timeframe (usually within 30 days).
Internal Register Maintenance
Every entity must maintain an internal UBO register, updated and available for inspection upon request by regulatory authorities.
Annual Confirmation
UBO information must be verified and submitted annually to ensure compliance and data accuracy.
How to Identify the Ultimate Beneficial Owner?
The beneficial owner is typically the person who:
- Owns 25% or more of the capital or voting rights
- Has the right to appoint or remove directors or managers
- Exercises significant influence or control through other means
- Receives significant financial benefits or income from the business
In cases where no individual meets these thresholds, companies must disclose the senior-most manager or director as the UBO.
Penalties for Non-Compliance with the UBO Law in Saudi Arabia
Failure to comply with the UBO disclosure requirements can result in serious legal and financial consequences.
Fines and Financial Penalties
Entities that do not submit accurate or updated UBO data may face administrative fines, which vary based on the size and severity of the breach.
Suspension of Commercial Registration
Companies that continuously fail to comply may have their Commercial Registration (CR) suspended or revoked by the Ministry of Commerce.
Legal Action
Providing false information or concealing beneficial ownership can result in legal proceedings, asset freezes, or criminal investigations under Saudi law.
Steps to Comply with the UBO Law in Saudi Arabia
To comply with the UBO law in Saudi Arabia, start by identifying individuals who own or control your business. Gather their details, including ID and ownership percentage. Maintain a clear UBO register, submit it to the authorities, and update it when changes occur. Regular updates and accuracy are key to compliance.
Step 1: Review Your Ownership Structure
Start by analyzing your company’s shareholding and control structure to identify anyone who meets the definition of a UBO.
Step 2: Collect Required Documentation
Gather valid IDs, passport copies, and proof of ownership or control for each beneficial owner.
Step 3: Complete the UBO Register
Maintain a detailed UBO register with all the required information and keep it regularly updated.
Step 4: Submit UBO Information to Authorities
Report the information through the Ministry of Commerce’s online platform, or via other approved government channels.
Step 5: Update When Changes Occur
You must notify authorities within 30 days if there’s any change in:
- Ownership
- Control
- Contact details
- Company structure
Impact of the UBO Law on Foreign Investors in Saudi Arabia
Foreign investors must take special care in complying with UBO regulations, especially when entering joint ventures, setting up LLCs, or investing through holding companies.
What Foreign Investors Should Know:
- UBO disclosure is mandatory, even if shares are held through offshore entities
- Indirect ownership must be clearly traced to the real individual beneficiary
- Failure to disclose may result in a ban from participating in government contracts or new business registrations
The Role of UBO Compliance in Business Risk Management
Accurate UBO tracking helps companies:
- Avoid legal penalties
- Detect internal fraud or unauthorized control
- Strengthen banking and financial relationships
- Build credibility with partners and authorities
UBO and Banking in Saudi Arabia
Banks in Saudi Arabia now require UBO information during:
- Account opening
- Loan or credit applications
- Transaction monitoring
- KYC (Know Your Customer) processes
Businesses must ensure that UBO data matches what’s submitted to regulatory authorities and is updated regularly.
Best Practices for UBO Compliance in Saudi Arabia
- Use legal and business consultants to analyze complex ownership
- Keep your UBO register digitally updated and securely stored
- Train your compliance team or HR to track changes in management or control
- Periodically review UBO data to ensure no outdated information exists
- Be transparent with auditors, banks, and regulatory bodies
How UBO Law Supports Saudi Vision 2030
The UBO law in Saudi Arabia directly aligns with Vision 2030 goals by:
- Improving corporate governance
- Creating a safer business ecosystem
- Promoting international investment confidence
- Ensuring transparency in both public and private sectors
It also strengthens Saudi Arabia’s position as a G20 economy that supports ethical business growth and global trade.
Conclusion
Understanding and complying with the new Ultimate Beneficial Ownership (UBO) law in Saudi Arabia is not optional — it’s a legal necessity. From startups to holding companies, every entity must now maintain and disclose beneficial ownership to stay on the right side of the law.
For companies navigating complex ownership or investing through multiple channels, working with expert Business Setup Consultants in Saudi Arabia ensures you meet every legal requirement, avoid penalties, and maintain trust with stakeholders and regulators.
UBO compliance is more than just a rule — it’s a business safeguard that adds transparency, structure, and long-term stability to your company.
Frequently Asked Questions (FAQs)
Is UBO compliance mandatory in Saudi Arabia?
Yes. All businesses registered in Saudi Arabia must disclose their ultimate beneficial owners to comply with the law.
What is the threshold for identifying a UBO?
Any person who owns 25% or more of a company’s shares or voting rights, or controls it in any way, is considered a UBO.
How often should UBO information be updated?
UBO information must be updated within 30 days of any change, and confirmed annually with the authorities.
Can a foreign national be a UBO in Saudi Arabia?
Yes. Foreign nationals can be UBOs, but they must provide proper documentation and disclose ownership clearly.
What happens if a company fails to disclose UBOs?
Failure to comply can lead to financial penalties, suspension of the Commercial Registration, or legal action.
