The Beneficial Ownership Rules promulgated pursuant to Ministerial Decision No. (99), approved by His Excellency Minister of Commerce, and dated 5 Jumada II 1447H, constitute a recent and material development within the Saudi corporate regulatory framework. Published in the Umm Al-Qura Gazette, the Decision repeals Ministerial Decision No. 235 and establishes a more structured regulatory approach, reflecting a deliberate legislative intent to enhance corporate transparency and to align disclosure obligations with internationally recognized compliance standards, particularly in the fields of anti-money laundering and counter-terrorism financing.
A central feature of Decision No. 99 lies in its reformulation of the criteria governing the identification of the beneficial owner. The Decision adopts a mandatory hierarchical methodology, whereby priority is accorded to natural persons holding twenty-five percent (25%) or more of the company’s capital, whether directly or indirectly. In the absence of such ownership, the assessment proceeds to individuals who exercise ultimate effective control by any means whatsoever. Where neither ownership nor control may be established, the legal presumption operates in favor of designating the company’s director, board member, or chairman as the beneficial owner by reason of their managerial authority. This structured sequencing represents a clear departure from the former regime, which did not impose an obligatory order for the application of these criteria and thereby allowed for interpretive divergence.
The Decision further reinforces corporate obligations by integrating beneficial ownership disclosure into the incorporation stage, imposing a duty to update the relevant data within fifteen days of any subsequent change, and requiring annual confirmation without the imposition of fees. In addition, companies are expressly obligated to maintain an internal beneficial ownership register, supported by adequate documentary evidence, and to extend full cooperation to the Ministry of Commerce and other competent authorities whenever such cooperation is lawfully required.
While the existence and confidentiality of a beneficial ownership register were acknowledged under the repealed Decision No. 235, the new Rules introduce a more coherent and comprehensive regulatory framework. This framework expands the scope of mandatory information to be recorded, standardizes the data retention period by linking it exclusively to the deregistration of the company, extends record-keeping obligations to the liquidator where applicable, and replaces the notion of general access with a formalized mechanism for the provision of information to competent authorities, including the execution of requests submitted on behalf of foreign authorities.
As regards scope of application, the Beneficial Ownership Rules extend to foreign companies conducting business within the Kingdom, pursuant to the provisions of Chapter Eleven of the Saudi Companies Law. This extension confirms that foreign entities duly registered in Saudi Arabia are subject to the same beneficial ownership disclosure obligations imposed upon domestic companies, thereby reinforcing regulatory consistency and equality before the law.
In conclusion, Ministerial Decision No. 99 does not merely restate the provisions of the former regulatory framework, but rather constitutes a substantive normative development. By enhancing precision, strengthening enforceability, and consolidating regulatory oversight, the Decision affirms the role of beneficial ownership disclosure as a fundamental instrument in promoting transparency, supporting sound corporate governance, and safeguarding the integrity of the Saudi business environment.