Based on the principle of participation and transparency, the Ministry of Commerce and the Capital Market Authority invite the public and those interested to express their opinions and suggestions regarding the New Corporate Law Proposal, via the following e-mail (CLR@mc.gov.sa), deadline 23.12.1441 AH, corresponding to 13.08.2020 AD.
This initiative aims to develop the legislative system of the corporate, in light of the investigating resulted from the application of the relevant provisions and the difficulties that have arisen in the corporate and the business community, taking into consideration the best international experiences and practices as a guidance.
The New Corporate Law aims to facilitate the procedures and the official requirements, thus stimulating the business environment and supporting the investment. The New Corporate Law aims as well to strike a balance among the stakeholders, besides providing an effective framework for corporate governance; that is characterized with justice, in addition to enforcing the institutional business. This Law may contribute to the sustainability of economic entities, including family companies, as well as attracting the domestic and foreign investments, also ensuring the availability of sustainable financing sources, more than that meeting the needs and requirements of the entrepreneur sector, and stimulating the growth of small and medium enterprises.
Among the most prominent features of the New Corporate Law are the introduction of a new shape, which is represented by a Limited Joint Stock Company, also reorganizing the Partnership Co. by shares, as well as allowing the company to take an innovative name, or a name derived from its purpose, or the name of one or more of the partners or shareholders, in addition to the possibility that the memorandum of association or its basic regulations may include the provisions agreed upon by the partners, whether in a (partner agreement or a family pact), in addition to reducing the procedure cost for establishing and registering the corporate, including the Single-Person Company, as well as allowing the joint partner to take a legal characteristic.
The New Corporate Law also includes the provisions organizing the profit and loss, also the possibility of distributing interim profits among the partners or shareholders, as well as developing the provisions related to the merging and transformation in the corporate, in addition to the flexibility for issuing and circulating the shares, besides allowing the issuance of several types and categories of shares, bearing different rights, more over not requiring a specific nominal value to issue the shares, also organizing the processes of issuing debt and deed instruments, and allowing the Limited Liability Company to issue them according to the Capital Market System.
In terms of reducing the administrative and financial burdens, the New Corporate Law includes exempting the micro and small companies from the requirement of appointing an auditor, as well as eliminating the financial reserve requirement for the corporate, with the possibility of agreeing to assign a percentage of the net profit to establish a reserve to be agreed upon. The New Corporate Law includes as well amending the Company's Termination Article, as per the regulation in force, when its losses reach half of the capital.
The new proposal includes a number of new provisions for the Joint Stock Co., the most prominent of which are: Not to stipulate a maximum number of the members of the board of directors, and not to set a maximum limit for board members ’remunerations, while giving the Shareholders’ Association the right to define such bonuses, in addition to stating shareholders ’rights and clarifying the duties and obligations of the board of directors’ members.
The new proposal has paid special attention to modern technology by enhancing its uses, whether by inviting the general assemblies of shareholders or corporate to hold meetings, and to participate in the deliberations, also to vote on the decisions and so on.
The new proposal also dealt with enforcing the provisions that organize the non-profit companies, in order to ensure the growth and development of non-profit business in a manner that is compatible with the economic and investment development witnessed by the Kingdom of Saudi Arabia, in addition to the provisions organizing the Professional Companies including: Establishing, Management, Practicing Activities, Governance and Termination.
An introductory document has been prepared for the New Corporate Law, which includes the most prominent features and provisions of the proposal, its goals and the countries under study and comparison. The Ministry of Commerce and the Capital Market Authority invite the public and those interested to participate and express their opinions on the New Corporate Law Proposal.
Notably, the New Corporate Law Proposal, Introductory Document and the Form for Expressing Opinions can be accessed through the following links:
mc.gov.sa/CSD