Key takeaways
The stated objectives of the new UBO decision are to enhance corporate transparency in alignment with international requirements and to establish a database to register and maintain UBO data.
A natural person is considered a UBO if any of the following conditions are met: (i) the person directly or indirectly owns at least 25% of the Saudi company's share capital, (ii) the person directly or indirectly controls at least 25% of the company's total voting rights, (iii) the person has the authority to appoint or remove the company's manager, the majority of the board members, or the company's president, whether directly or indirectly, (iv) the person has the ability to influence the company's operations or decisions, whether directly or indirectly, or (v) the person is a legal representative of a legal entity that meets any of the criteria set forth above. If none of the criteria is met, then the company's manager, board member, or president, as applicable, shall be deemed its UBO.
New companies are required to disclose information and supporting documentation regarding their UBOs when applying for incorporation. Existing companies, must make their UBO disclosures to the Ministry of Commerce (MoC) within one year from the date of the company's registration in the Commercial Register.
The information required includes at a minimum the UBO's (i) name and national identity details, or residency card or passport information in case of non-Saudis, (ii) national address or place of residence address, (iii) mobile phone number and email address, if available and (iv) the criteria for identifying the UBO and the date thereof, in accordance with the UBO rules.
Companies are required to use reasonable measures to identify their UBOs and obtain the required information and supporting documents. They must prepare a special register in which such information and documents are recorded. Additionally, companies are required to submit a request to MoC to update their disclosures within 15 days from the date of any change or amendment. An annual confirmation of the continued accuracy of disclosures must also be submitted to the MoC.
Certain companies are exempt from the requirement to disclose UBO information, specifically companies whose entire share capital is owned by the state or one of its legal entities, companies subject to liquidation procedures under the Bankruptcy Law, and companies specifically exempted by the Minister of Commerce.
The MoC will prepare a guidance manual setting out the procedures and measures that companies must take to identify their UBOs, obtain the related information and supporting documentation, and disclose it to the MoC.
The MoC will establish a UBO Register, which will include company information, UBO information, and in case of updates reasons for updating such information, and the date of each update. Data recorded in UBO Register will be retained for a period of five years from the date of termination of a UBO's status or deregistration of the company from the commercial register. The MoC will ensure the confidentiality of the UBO Register and grant access to it only to concerned governmental authorities.
Penalties will apply to companies that fail to comply with the disclosure, updating, and annual confirmation requirements.
We encourage all clients to review the new UBO Rules and ensure that their Saudi companies comply with these requirements.
We are continuing to closely monitor developments related to UBO Rules. Should you require further assistance, please do not hesitate to contact us.
