The Existing Companies have been granted a Period of One Year to Make Necessary Modifications in Accordance with the New Corporate Law, before it comes into Force
Further to what was announced by the Ministry of Commerce and Industry and the Capital Market Authority on 15.05.1437 H corresponding to 24.02.2016 AD pertaining to the cooperation memorandum signed by the two parties, relevant to the application of the New Corporate Law, which comes as a result of the Ministry and the above mentioned authority`s pursuit to cooperate and coordinate the policies and procedures for the application of the new corporate law, in order to achieve integration and harmony while implementing its provisions, and since the said law had been published in Umm al-Qura newspaper on 22.02.1437 H corresponding to 04/12/2015 AD, therefore it will come into force on 25.07.1437 AH corresponding to 02.05.2016 AD.
According to article (224) of the New Corporate Law, which stipulates that: "When the said law comes into force, the existing companies should modify their positions in accordance with its terms and provisions within a period not exceeding one year, starting from the date of its enforcement, with the exception that the Ministry and the Authority's Board would identify – each in its own jurisdiction - the provisions therein governing those companies during that period ", the said deadline does not include the new companies established after the law`s enforcement, also It does not affect the decisions and penalties imposed against the crimes and offenses committed during such period.
It is worth mentioning that the provisions granting the company such a deadline to make the necessary modifications, are mentioned in paragraph (1) of Article (68 & 76) , as well as paragraph (1) of Articles (81, 101, 102, 103, 104, 150, 182, 183, 184, 185, 186) of the said law.
The Provisions granting the company a deadline to modify its position
| Paragraph 01 of 68 |
Determine the number of members of the joint-stock company`s Board of Directors |
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| 76 |
Organize the remuneration of Board of Directors members |
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| Paragraph 01 of 81 |
Assign and specify the competences and functions of the Chairman of the Board of Directors, Vice Chairman and the delegated member |
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| 101 |
Forming a review committee of non-executive board members |
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| 102 |
organize the issuance of the review Committee's decisions |
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| 103 |
The competence of the Review Committee |
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| 104 |
The competence of the Review Committee |
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| 150 |
Organize dealing with the joint-stock company`s losses |
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| 182 |
Organizing the holding company |
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| 183 |
Holding Company`s purposes |
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| 184 |
Preventing the affiliate company of owning stakes or shares in the holding company |
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| 185 |
The financial statements of the Holding Company |
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| 186 |
Provisions of the holding company |
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The provisions that the companies must abide by the date of enforcement of the law, are contained in articles (90 & 95) of the said law
Provisions that Companies must abide by the Date of the Enforcement of the Law
| 90 |
Organize holding the General or Special Assemblies of the shareholders, upon the call of the Board of Directors |
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| 95 |
Organize the cumulative voting during the election of the Board of Directors, and determine the voting of the Board of Directors members |
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In addition, the existing companies have no right, upon the enforcement of the new corporate law, to take any action or arrangement or to create any new legal status, contrary to the said law, after its enforcement. For example, the provisions of articles (101, 102, 103, 104) would be applied when issuing a new decision for forming & reforming the review committee, as well as paragraph (1) of Article (68) when appointing a new member of the board of directors after the enforcement of the law.
It should be noted that the companies and the shareholders are entitled to exercise all the rights set forth in the said law, as from the date of its enforcement, taking into account the modifications-if needed- of the basic rules & regulations of companies or their contracts that the law provided and entitled the Ministry and the authority to issue for exercising such rights. According to what is stated in the previous announcement, the Ministry and the Authority intend to publish the Rules & Regulations, relevant to the corporate law, in order to get the opinions and views of the public and those interested during the coming period.