Saudi Gazette report

RIYADH — Minister of Commerce Dr. Majed Al-Qasabi has approved the actual beneficiary rules, which will take effect, in conjunction with the Commercial Registration Law, on April 3, 2025. Any company that violates the rules of the actual beneficiary shall be punished with a fine of up to SR500000 or any alternative penalty in accordance with the Companies Law and its executive regulations.

The rules aim to enhance corporate transparency in line with international standards and establish a database for recording and maintaining the actual beneficiary information. The rules were prepared in accordance with the recommendations of the Financial Action Task Force (FATF) and international best practices, in cooperation with specialized experts.

The actual beneficiary is a natural person, who directly or indirectly owns at least 25 percent of the company’s share capital, as well as controls 25 percent of minimum of total voting rights. He is also the one, who has the power to appoint or remove the company’s manager, board majority, or chairman. The actual beneficiary should be able to influence the company’s decisions or operations, acts as a legal representative of an entity meeting any of the above criteria, as well as serves as a director or board member in the company. In the event that any of the above criteria is not met, the company's director, board member or chairman - as the case may be - shall be deemed the real beneficiary.

The rules apply to companies subject to the provisions of the Companies Law and foreign companies that operate within the Kingdom, except for joint-stock companies listed on the capital market. The rules also exempt companies, whose capital is fully owned by the state or one of its legal entities directly or indirectly, and companies subject to any of the liquidation procedures under the Bankruptcy Law, from the requirement to disclose the real beneficiary's data.

The rules emphasized that the company's founders must disclose the real beneficiary's data when establishing a company, while existing companies at the time of the rules' enforcement must disclose it within a period ending with the due date of the annual confirmation of the accuracy of the data registered in the commercial register.

The rules also spell out the companies' obligations in terms of disclosing the real beneficiary's data to the ministry and any update thereto, as well as preparing a special register in the company to record the data, and submit the annual confirmation of the accuracy of the real beneficiary's data to the ministry, which is done without financial compensation to the company or the real beneficiary.

The rules have strengthened the confidentiality of data and the statutory period for which it must be retained. This data is only accessible to the regulatory bodies and competent authorities mentioned in the relevant regulations.