Saudi Arabia implements Companies Law Amendments
14 October 2020 - Saudi Arabia has recently published the upcoming changes to the Companies Law, which are as follows:
- Two new types of legal entities have been introduced: the Company Limited by Shares and the Simple Joint Stock Company;
- The above-mentioned newly created types of entities would be allowed to distribute either annual or interim dividends, provided that certain financial thresholds are met, eg. sufficient retained profits, ability to pay off its debts when due, etc.;
- The provision regulating automatic dissolution has been waved;
- There is no longer a restriction on a single shareholder LLC owning another single shareholder LLC, allowing them to trade debt;
- JSCs are expected to have flexibility with regards to share capital and share issuing and the board of directors can consist of as many as provided by the company’s Articles of Association since the requirement of a maximum number was abolished.
There is no date set for implementation of the changes; however, it is expected by 2021.