Lately, the Kingdom of Saudi Arabia has issued the new companies law, which will be compatible with KSA vision 2030, and encourages foreign investors to join in on the significant economic developments in Saudi Arabia. In addition, states a new form of a company called “Simplified Joint Stock Company” and is expected to meet the needs of entrepreneurship and venture capital growth.
The new law regulates all provisions related to companies, whether commercial, non-profit, or professional, and will enter into force after 180 days of being published on 29 June 2022, and it is expected that the new edition will facilitate the establishment of companies, It also addresses some of the challenges of the private sector, including the challenges of family businesses, as it will regulate family ownership in the family business, its governance and management, work policy, employment of family members, profit distribution, and the challenges of small businesses through which business initiatives are active, achieving legal protection for them and achieving justice in litigation on the basis of legislative
The new companies law regulates all types of companies, whether they are commercial, non-profit, or professional companies, This gathering process aims to ensure the availability of all related provisions in a single legislative document.
Also, The law created rules to regulate family ownership in the family business, its governance and management, work policy, employment of family members, and distribution of profits through the so-called family charter, so as to ensure the sustainability of these companies.
This family charter will be binding and may be part of the company’s articles of incorporation (AOI). and It is stipulated that it does not violate the Saudi laws or the company’s articles of incorporation.
Under the new law, The company can be taking one of the following forms:
It is noted that there is a new form of company introduced by the new law called “Simple Joint Stock Company”, this form is expected to meet the needs and requirements of entrepreneurship and venture capital growth.
The new form will serve as an investment arm that enables non-profit companies to advance to the third sector, stimulate social responsibility, and allow them to generate returns in their businesses and spend them on non-profit purposes. Also, the minimum capital requirement for a joint stock company does not apply to a simplified joint stock company.
Definitely, these new provisions will be an excellent opportunity for investors and entrepreneurs, even if they do not have very big capital, because the law facilitates requirements and procedures for establishing companies and exempts micro and small companies from many obligations such as the obligation to appoint an auditor.
Also, the new law made it possible to implement procedures electronically through modern means of communication “remotely”, including submitting incorporation applications, attending general assemblies of shareholders or partners, and voting on decisions.
On the other hand, the new law facilitates the practice of the foreign company’s activities and business in the Kingdom through a branch, representative office, or any other form according to the foreign investment system, with the possibility of appointing an auditor by a decision of the company’s manager, and the possibility of the foreign company holding a temporary license continuing and transforming it.
And to attract investments, It allowed the issuance of different types of shares with varying categories and rights, privileges or restrictions, and the possibility of issuing shares allocated to employees to attract and motivate talent. It also allowed the distribution of profits temporarily or annually with governance that ensures that the company’s creditors obtain their rights.
Yes! This is the time to enhance your ability to lead, invest, and earn. With ALF Law Firm you can establish a company that is compatible with your dreams, to make them true, with various experience and skills held by our lawyers and counselors.