The New Companies Law Implementing Regulations have been established in accordance with global best practices. They contain numerous provisions that contribute to the growth and expansion of existing companies and maintain the framework for ensuring their sustainability, thereby boosting the investment climate in the Kingdom.
The Regulation's provisions were influenced by a number of corporate provisions in advanced nations, particularly those from the European Union and other nations totaling more than nine. These are the United States of America, Canada, Britain, Germany, France, and Singapore, as well as three Gulf States, namely Kuwait, Oman, and the United Arab Emirates. The key international organizations include the World Bank and the United Nations Commission on International Trade Law, also known as UNCITRAL. The Implementing Regulations took into account the conformity of legislation and regulations with the Kingdom's legislative and social nature.
The Regulations set out mechanisms for the filing procedures for financial statements, the auditor's report, if any, and the director or board of directors' report on the company's operations, as well as the procedures for the appointment of the auditor, the term of the appointment, and the standards for exempting small and micro enterprises from the requirements for the appointment of the auditor.
The regulations governing the formation of a professional company by one or more persons for the practice of more than one liberal profession or a partnership with a non-Saudi professional company were also taken into consideration. They described the areas of business of a non-profit organization, expenses, membership qualifications, and how the organization uses its income to develop investments or expand the scope of operation.
The requirements for the transfer of the types of shares or any of their category were also outlined, along with the rules for the issuance of common, premium, refundable, or any of their categories.
The Regulations further specify the procedures for the distribution of periodic and yearly dividends, the defined period between entitlement and disbursement of profits, the criteria for the payment of joint shareholding company's board member remunerations, and the circumstances under which they may not be entitled and how they may be returned.
The regulation also covered the due diligence and loyalty obligations of a director or board member of the company, as well as the definitions of terms like indirect interest, competition, and disclosure procedures. They also included how board members are elected and removed, as well as the duration of the term and responsibilities of the removed board or the end of its session. Ordinary voting is permitted for board member elections.
The Regulations have focused on the specific provisions of limited liability companies in cases of voting or removal of the director or in cases where the partner owns shares, and other cases in order to simplify the conduct of business.
The Implementing Regulations of the New Companies Law establish the rules for calling shareholders via contemporary technological means, including everything related to holding general assemblies and electronic voting. They pay attention to the provisions of the company's transformation, merger, or division and the steps for submitting a mandatory proposal.