Learn about the 13 key features of the new Companies Law

29 Jun 2022


The new Companies Law, which was approved recently by the Council of Ministers, comes with benefits that will contribute to developing and expanding this vital industry, strengthening the private sector, and making the local market more appealing.

In a single legislation, the new law regulates all the rules pertaining to businesses, nonprofit organizations, and professional corporations. It increased business flexibility by eliminating restrictions on company names, stock trading, and all stages of incorporation, practice, and exiting.

The law permits the distribution of interim or annual dividends to partners and shareholders as well as offering shares of the company to a person in exchange for performing work or services that benefit the company. Moreover, it allows for the segmentation or division of shares into smaller nominal shares, with those smaller shares merging to represent larger nominal ones.

To accommodate the needs of entrepreneurs, the law included the formation of a new type of company known as a "Simple Joint Stock Company." It is appropriate for small and medium-sized enterprises as well as venture capitals. Simple joint stock companies are the world's most common businesses nowadays. 

In order to ensure the sustainability of these businesses, the law  allows family businesses to create a family charter governing family ownership of a company, its governance and management, business policy, family members' employment policy, dividends distribution, disposition of shares, dispute resolution mechanism, etc.

The law recognizes the importance of non-profit organizations in economic and social development. This critical sector was organized to ensure its empowerment and sustainability. 

The law also developed provisions for company conversion and merger, as well as the ability to divide the company into two or more. The companies founded as a result of such division can take any form.

In order to keep up with technological developments, the law permits electronic voting on resolutions, electronic assembly attendance, and electronic incorporation application submission.

The law gives micro and small businesses more flexibility by exempting them from the requirement to appoint an auditor and delineating relevant controls and provisions to encourage entrepreneurs.

It established methods for resolving disputes and differences through arbitration or other alternative means of resolution, as well as provisions for company liquidation. It facilitates their procedures in accordance with bankruptcy law provisions.

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Last Modified 04 Jul 2022