Riyadh has introduced updated corporate regulations requiring companies operating in the Kingdom to identify and disclose their beneficial owners as part of a broader push to improve transparency, accountability, and compliance with global standards on financial crime prevention. The revised rules were approved by the Saudi Minister of Commerce, Dr. Majed Al-Qasabi, and take effect as part of ongoing efforts to align with international anti-money-laundering and corporate governance norms.
Under the new framework, a beneficial owner is defined as a natural person who directly or indirectly owns at least 25 percent of a company’s capital or voting rights. Where no individual meets this ownership threshold, or where ownership is unclear, the rules allow identification based on ultimate effective control — including persons exercising significant influence or control over the company’s operations or governance.
Companies are now required to maintain and regularly update detailed records of their beneficial owners, including personal identification information and the nature of their ownership or control. This information must be recorded in a dedicated internal register and made available to the Ministry of Commerce for compliance purposes.
A Step Toward Global Standards in Transparency and AML Enforcement
The updated regulations replace previous beneficial-ownership guidelines and are designed to strengthen corporate oversight across sectors — excluding only limited categories such as subsidiaries of publicly listed companies that already adhere to other disclosure obligations. The move reflects Saudi Arabia’s broader agenda to enhance corporate governance, prevent misuse of opaque ownership structures, and combat illicit financial activities such as money laundering and tax evasion.
Officials emphasize that the rules help close gaps in understanding who ultimately controls or benefits from corporate entities. Where no owner is identified through the primary criteria, the person in senior leadership — such as the company’s manager, board member, or chairperson — may be deemed the beneficial owner for disclosure purposes.
Failure to properly identify and report beneficial owners can expose companies to regulatory scrutiny and potential penalties under existing companies-law provisions. Businesses operating in Saudi Arabia are therefore being urged to review their ownership structures and implement internal compliance mechanisms to ensure timely and accurate reporting.
Enhancing Business Environment and Investor Confidence
The update is part of a broader trend across Gulf Cooperation Council (GCC) countries to standardize beneficial ownership reporting — a move supported by international bodies such as the Financial Action Task Force (FATF). Prior to these changes, gaps in the availability of ultimate beneficial ownership data made it difficult for regulators and law enforcement to trace obscured ownership through complex holding structures.
By codifying clear disclosure requirements and establishing a structured framework for identifying ultimate owners, Saudi Arabia aims to attract more foreign investment, build greater investor confidence, and strengthen the integrity of its commercial sector. The regulations also support efforts to combat financial crime, enhancing the transparency of corporate activities in one of the region’s largest economies.
Business leaders and compliance experts note that the new regime will require companies to adopt better governance practices, document internal controls, and ensure that information on ownership changes is promptly reported to authorities — reinforcing Saudi Arabia’s commitment to a more transparent and secure business environment.
