The Saudi Arabian authorities recently announced that the New
Companies Law, a set of new companies regulations approved by the
Council of Ministers and the Shura Council earlier this year, will
come into effect in May 2016. The New Companies Law replaces the
1965 Companies Law which is the main source of codified legislation
governing the establishment, operation and liquidation of corporate
vehicles under Saudi Arabian law.
The new law represents some significant changes and modernizations
to the existing companies law regime from 1965. While some changes
will have limited impact for foreign investors doing business in
the Kingdom, others have the potential for significant impact.
A detailed review by our Saudi Arabia team of the key changes
will feature in the January edition of Lexis Nexis Middle East Law
Alert.
Examples of some of the key updates include changes to the number
of shareholders and minimum paid-up capital for Joint Stock
Companies (JSCs), the approval of "One Person" companies,
reductions to statutory reserve requirements for Limited Liability
Companies and JSCs, and changes to the rules governing the
dissolution of companies for excessive losses.
Companies doing business in Saudi Arabia will likely benefit from
the new law and from the increased attention by the Saudi Arabian
authorities on regulations affecting companies operating in the
Kingdom. Such companies can increase their profitability and reduce
their risks by leveraging the New Companies Law with the advice of
experienced counsel.
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