Saudi Arabia has entered a new phase in corporate transparency. The introduction of the Ultimate Beneficial Owner rules in April 2025 signalled the Kingdom’s commitment to aligning with international standards on ownership disclosure and regulatory accountability. What began as a foundational reporting obligation has now evolved into a comprehensive compliance framework with real operational consequences. In November 2025, the Ministry of Commerce approved a revised and expanded UBO regime. These new rules will take effect on 4 January 2026 and mark a decisive shift away from one-off filings toward continuous governance obligations that apply to most companies operating in the Kingdom.
A Clear and Enforceable Definition of UBO
At the heart of the revised framework is a precise statutory definition of an ultimate beneficial owner. A UBO is any natural person who ultimately owns or exercises effective control over a company, whether directly or indirectly. The focus is firmly on substance rather than legal form. To ensure consistency, the Ministry has adopted a structured three-tier identification approach. First, ownership. Any individual holding twenty-five per cent or more of the company’s capital directly or indirectly is deemed a UBO. Second, effective control.
Where ownership thresholds are not met, any person exercising decisive influence through voting rights, contractual arrangements or other means must be identified. Third, senior management designation. Where neither ownership nor control can be attributed to an individual, the company must designate a senior figure, such as the manager, a board member or the chairman, as the UBO. This approach ensures that every entity has a clearly identified UBO regardless of how dispersed or layered its ownership structure may be.
Narrowed Exemptions and Broader Coverage
Exemptions under the revised rules are now limited. Only subsidiaries of companies listed on the Saudi exchange are exempt from the reporting obligation. All other entities are required to comply. This includes limited liability companies, non-listed joint stock companies, foreign-owned subsidiaries, holding companies, and professional firms. For many businesses, this represents a material expansion of compliance scope, particularly where complex group or cross-border structures are involved.
Expanded Disclosure Obligations
The revised framework significantly broadens the scope of information that companies must collect and maintain. Required disclosures now include the full legal name of the UBO, national identity, Iqama or passport details, residential address, the legal basis on which UBO status arises and the dates on which UBO status begins and ends. This level of detail reflects a clear regulatory expectation. Companies must actively understand and monitor who ultimately owns or controls them rather than relying on static records or historical assumptions.
Continuous Compliance Is Now the Standard
The most significant shift introduced by the new rules is the move from one-time disclosure to continuous compliance. Each company must maintain a dedicated UBO register at its head office in Saudi Arabia, confirm UBO information annually, and notify the Ministry of Commerce within fifteen days of any change affecting ownership or control. Notifications must be made through the Saudi Business Center platform and must include the reasons for the change. In practical terms, this means that UBO analysis must now be embedded into everyday corporate actions, including share transfers, capital changes, restructurings and senior management appointments.
Enforcement Direction and Practical Consequences
Alongside the revised framework, a draft ministerial decision published on the Istitlaa platform proposes introducing financial penalties for noncompliance. These include a fixed fine of 500 Saudi riyals for failure to disclose UBO information or to submit the annual confirmation, with escalating penalties for repeat violations.
Although these penalties have not yet been formally enacted, they provide a clear indication of enforcement direction. More importantly, noncompliance already carries real operational risk. Companies may face suspension of corporate services, delays in renewing commercial registrations and licences, and restricted access to government platforms.
UBO compliance in Saudi Arabia is no longer a technical filing exercise. It is now a core component of corporate governance and regulatory risk management. Companies that approach UBO compliance as an ongoing governance function rather than an administrative task will be better positioned to meet regulatory expectations, avoid disruption, and maintain operational continuity. As Saudi Arabia continues to strengthen its transparency framework, UBO compliance has become a permanent and material feature of doing business in the Kingdom.