His Excellency the Minister of Commerce, Dr. Majid bin Abdullah Al-Qasabi, issued Resolution No. (99) dated 05/06/1447 AH approving the Beneficial Ownership Rules, which define the beneficial owner as the person, or persons of natural status who ultimately exercises final, actual, direct, or indirect control over the company.
The rules which replace the previous Beneficial Ownership Rules issued under Ministerial Resolution No. (235) dated 13/08/1446 AH, aim to raise the level of corporate transparency in line with international and domestic requirements related to anti-money laundering, combating the financing of terrorism, and counter-proliferation financing. They also aim to establish a database within the Ministry to record and maintain beneficial ownership information.
The rules specified the criteria for determining the beneficial owner in the following order:
First: A natural person who owns, directly or indirectly, a share of no less than 25% of the company’s capital.
Second: A natural person who exercises control, directly or indirectly, over the company by any means.
Third: If no beneficial owner can be determined based on ownership or control, then the company’s manager, board member, or chairperson shall be deemed the beneficial owner.
The Ministry clarified that these criteria are applied sequentially in the order listed above. That is, the company must first apply the criterion in (First). If it cannot be satisfied, the company may then move to the criterion in (Second). If no beneficial owner can be identified using both (First) and (Second), the company shall move to the criterion in (Third) to designate members of the administrative body as beneficial owners.
The rules require companies to prepare a dedicated register to record beneficial ownership data, which must include: name, nationality, place and date of birth, identification details, passport information for non-residents, address, contact information, the criterion by which the person qualifies as a beneficial owner including the nature and extent of ownership or control, and the date the beneficial ownership status was established.
The rules also obligate companies to undertake reasonable procedures and measures to ensure the identification of the beneficial owner, and impose penalties on companies that fail to comply, in accordance with the Companies Law.
It is noteworthy that there are no fees for registering or annually confirming beneficial ownership information.