Business: Owning 25% of the company means being a true beneficiary – Decision details

The Ministry of Commerce confirmed in an important clarification to the business sector and companies that the criteria for determining the “beneficial owner” depend mainly on the percentage of ownership and control, noting that if a person owns 25% or more of the company’s capital or voting rights, he is subject to the classification of the beneficial owner, which requires disclosure in the official records.

Criteria for determining the true beneficiary

This clarification comes within the framework of regulatory efforts to regulate the business environment, as the definition of beneficial owner is not limited to direct ownership. The Ministry explained that a beneficial owner is any natural person who owns or controls, directly or indirectly, 25% or more of the company's shares or stock, or who holds voting rights of the same percentage. If it is not possible to identify a specific person who meets these criteria, then the person who exercises effective control over the company's decisions or management is considered the beneficial owner. In cases where none of the above can be identified, the person holding a senior management position is considered the one subject to this procedure.

General context and importance of regulatory procedures

These measures are part of a package of legislative and regulatory reforms aimed at enhancing transparency in the commercial sector. Procedures for disclosing beneficial owners are a cornerstone of anti-money laundering and counter-terrorism financing laws. Through these controls, regulatory authorities seek to identify the natural persons behind legal entities, thus preventing the exploitation of companies as fronts for illicit activities or commercial concealment.

Economic impact and international dimension

On the economic front, strict adherence to beneficial ownership standards contributes to improving the investment environment and making it more attractive and reliable for both domestic and foreign investors. Financial transparency enhances market confidence and ensures fair competition.

At the international level, the application of these standards is in response to the requirements of the Financial Action Task Force (FATF) and international standards for tax transparency. Countries' adherence to these standards raises their credit ratings and strengthens their position in global indices related to combating financial crime, thus facilitating international banking transactions for national companies and protecting them from sanctions or financial restrictions.

Call for compliance and data updates

The relevant authorities stressed the need for all establishments to create a special register for the true beneficiary, keep it and update its data regularly, and to provide this information to the Ministry upon request or during the periods specified for updating, in order to avoid falling under the purview of the regulatory penalties that may be imposed on violators of company regulations and combating cover-up.