Creating simple joint-stock companies and reducing establishment costs


The new corporate system project introduced a new form, which is a simple joint stock company, reorganization of a partnership limited by shares, allowing the company to take an innovative name or derived from its purpose, or one or more names from partners or shareholders in it, and also indicated the possibility of including the company’s founding contract or Its basic system of provisions agreed upon by the partners, whether in a (partner agreement or a family charter), in addition to reducing the cost of procedures for establishing and registering companies, including a one-person company, and allowing the joint partner to be legal. The Ministry of Commerce and the Capital Market Authority called on those interested and the public to express their opinions and proposals regarding the new corporate system project, via e-mail ([email protected]Before 12/23/1441 AH, based on the principle of participation and transparency. The new corporate system project aims to facilitate regulatory procedures and requirements to stimulate the business environment and support investment, as well as to strike a balance between stakeholders, provide an effective framework for corporate governance, institutional dedication, and sustainability of economic entities, including family companies, and attract domestic and foreign investment, and availability Sources of sustainable financing, as it meets the needs and requirements of the entrepreneurial sector, and stimulates the growth of small and medium enterprises. The draft system also included provisions for profit and loss, the ability to distribute interim profits to partners or shareholders, develop provisions related to merger and transformation, give flexibility to the issuance and circulation of shares, and allow the issuance of several types and categories of shares with different rights, in addition to not requiring a specific nominal value to issue shares Regulating the processes of issuing debt instruments and sukuk and allowing the limited liability company to issue them according to the financial market system.

The proposed project included exempting the micro and small companies from the requirement to appoint an auditor, and the reserve for the companies, with the possibility of agreeing to set aside a percentage of the net profits to form an agreement reserve.

The draft law included a number of new provisions for the joint stock company, the most prominent of which are: not to stipulate a maximum number of members of the board of directors, and not to set an upper limit for board members ’remunerations, while giving the shareholders’ association the right to define those bonuses, in addition to stating shareholders ’rights and clarifying the duties and obligations of board members .

The draft system paid attention to modern technology by enhancing its uses, whether to invite the general assemblies of shareholders or companies to participate in its deliberations and vote on its decisions, among others.

The project also dealt with the report on the provisions governing non-profit companies, in order to ensure the growth and development of non-profit work in a manner that is in line with the economic and investment development witnessed by the Kingdom, in addition to the provisions governing professional companies that dealt with the establishment, management, and practice of activities, governance and expiration.


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