Saudi Arabia’s new corporate law is extremely flexible and adopts international best practices

Saudi Gazette Report

Riyadh — A new corporate law approved by the Council of Ministers on Tuesday will help further stimulate and develop the Kingdom’s commercial system. The most important feature of the law is the high flexibility to empower the private sector in a way that protects businesses and keeps pace with the best international practices.

The law supports investment in SMEs by increasing corporate sustainability and facilitating procedural and regulatory requirements, increasing the level of system flexibility and adding new enterprises. The purpose is to increase the diversity of the market. We resolve customer rights, disputes and ensure fair treatment among stakeholders.

The new law was created in a way that addresses international best practices to address all the challenges facing the business sector. It works with many institutions in the public and private sectors. The law was enacted after soliciting opinions and listening to specialized institutions, international organizations and specialized consulting offices.

The law regulates all provisions relating to both for-profit, non-profit and professional enterprises. This is to make these provisions available in a single legislative document by adopting any type of company, a limited partnership, a limited partnership, a limited partnership, a limited limited partnership, and a limited liability company. is.

The law is a small business from micro or audit requirements.

Under the law, a new form of company called “Simple Co., Ltd.” was established to meet the growth needs and requirements of entrepreneurship and venture capital. It also serves as an investment sector that allows nonprofits to enter the third sector, stimulate social responsibility, generate profits in their businesses and spend them for nonprofit purposes.

The new law will reduce the statutory requirements and procedures for SMEs and micro enterprises, in addition to simplifying the requirements and procedures for establishing a company. This gives us the flexibility to include special terms in the company’s founding contract or its articles of incorporation, creating a possible mechanism for entrepreneurs, venture capital owners, and private ownership.

The law removes many restrictions at all stages, including establishment, business involvement, market withdrawal, and company name restrictions, allowing limited liability companies to issue debt certificates or negotiable financial instruments. did. The law amended the provisions for transformation and merger between companies, splitting the company into two or more companies and allowing the owners of individual entities to transfer their assets to companies of all kinds.

With regard to attracting investment, the law may issue different types of shares with different categories and rights, privileges or restrictions, and may issue shares allocated to employees to attract and motivate talent. Was recognized. Governance, which guarantees that the creditors of the company acquire the rights, could also distribute profits temporarily or annually.

The law has also made it possible to carry out procedures electronically through remote means of communication, such as filing a legal entity application, attending a general meeting of shareholders or partners, and voting for decisions. It disputes and by resorting to arbitration or other alternatives to resolve them, in addition to developing provisions for liquidation of the company and facilitating its proceedings, in line with the provisions of the Bankruptcy Law. It provides a means to resolve the discrepancy.

The new law, six years after the previous law was adopted in 2016, addresses all economic developments in the business environment. This law is in line with Kingdom Vision 2030 and the view of the private sector as a strategic partner. It also has a purpose related to facilitating the business of the company and enabling it to maintain its growth and growth momentum.