What Changed?
The Kingdom introduced a new Companies Law (New Law), which shall come into force and repeal the old Companies Law (Old Law) of 2015 after 180 days from the date of its publication in the Official Gazette (Umm Al-Qura), which was on the 22nd of July 2022.
The New Law is intended to encourage investments in line with the declared objectives of the Kingdom’s Vision 2030.
Most notable aspects of the New Law are articles pertaining to family-owned businesses, non-profits, professional Companies, and the introduction of a new form of joint-stock company, identified as the ‘Simple Joint Stock Company’ (SJSC), which is intended to be more amenable to change and less tedious as to encourage venture capital investments.
Changes also included omission of the formerly known ‘Partnership’ as referred to under Article 3(C) in the Old Law and some other restrictions. As well as, regulating the issuance of tradable debt instruments by limited liability companies, provisions pertaining to merges and acquisitions, and division of companies.
The New Law is planned to be more responsive to micro and small enterprises, conditionally relieving these enterprises from previously mandatory provisions requiring them to appoint an external auditor. It also recognizes the split and division of shares into lower nominal values following a split or higher nominal values following a merger. In addition to introducing the concept of issuing shares allocated to employees. Furthermore, it recognizes electronic attendance and voting for company assembly meetings, and harmonized the New Law with the Bankruptcy Law regulations.
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