At midnight tonight, the new corporate system in Saudi Arabia begins, which introduces standards for the so-called simplified joint-stock company, as it allows its establishment without a minimum capital, and it can be managed by one or more managers, and general assemblies are not required.
The new corporate law removed many restrictions at all stages (incorporation, practice, and exit), and allowed the limited liability company to issue debt instruments or negotiable financing instruments.
The new system addresses aspects of the challenges facing the business sector, in partnership with many entities from the public and private sectors, and seeking the opinions of professional bodies, international organizations and specialized consulting offices.
The system was prepared in the light of international practices, which regulate all provisions related to commercial, non-profit and professional companies, to ensure the availability of those provisions in a single legislative document.
Among the most prominent features of the new system is that the company that is established in accordance with the provisions of the new companies’ system takes one of the following forms: a limited liability company, a simplified joint-stock company, a limited partnership company, a joint-stock company, and a general partnership company.
The system excluded micro and small companies from the requirement to appoint an auditor, taking into account their modernity and size, and with regard to joint-stock companies, the system stated that there will be no maximum limit for the remuneration of board members in the joint-stock company, and the system gives the Ordinary General Assembly the power to determine the amount of those remunerations, while setting criteria Fair and motivating and commensurate with the member’s performance and the company’s performance.
The system abolished the maximum number of board members in a joint-stock company, so that shareholders can determine the number of members in the company’s basic system, and it also allowed the company to be one person without restrictions, and without the need to hold a constituent assembly.
The system facilitated the foreign company’s practice of activities and business in the Kingdom through a branch, representative office, or any other form “according to the foreign investment law”, with the possibility of appointing an auditor by a decision of the company’s manager, and the possibility of the continuation and transformation of the foreign company that obtained a temporary license.
The system enables professional companies to practice one or more free professions, and they have the right to take any form of company, and they also enable them to obtain financing to develop their business, by allowing the participation of non-professional investors in these companies and enabling them to invest their money in real estate, securities and others.