Saudi Arabia has approved stricter regulations governing how companies identify their beneficial owners, introducing clearer thresholds and expanded disclosure duties as part of the Kingdom’s wider push to enhance corporate governance and financial transparency.
The updated rules, endorsed by Minister of Commerce Dr Majed Al Qasabi, define a beneficial owner as any natural person who holds 25 per cent or more of a company’s ownership, whether directly or indirectly.
If no individual meets this threshold, or if the true owner cannot be confirmed, regulators will instead assess who has “effective and ultimate control” of the company to determine the beneficial owner.
The amendments also introduce a final fallback mechanism: when ownership and control cannot be clearly established, the beneficial owner will be designated as the company’s manager, a board member, or the chairman, depending on the governance structure.
The new rules further address the practice of partners or shareholders acting on behalf of another party. Anyone exercising rights over shares or stakes for someone else must now disclose the details of the actual beneficial owner and notify authorities of any changes within 15 days.
In a notable exception, subsidiaries of publicly listed companies are exempted from these reporting obligations, reflecting the higher transparency requirements already imposed under Saudi stock market regulations.
The strengthened framework aligns with international efforts to curb financial misconduct, increase accountability and support the Kingdom’s broader economic reforms.
