New Companies Law in Saudi Arabia

A new Companies’ Law was passed by the Kingdom of Saudi Arabia (“KSA”) on the 28^th of June 2022, adopted by Cabinet Decision 678/1443 that came into force in January 2023. The Ministry of Commerce also published the Regulations and subsequent guidance following the entry into force.

In keeping with the government’s goals to diversify the KSA economy and market, promote investment, and strengthen the private sector, the amendments seek to make a number of changes to its predecessors, the Companies’ Law promulgated by KSA Royal Decree No. 1437H (2015) and the Professional Companies Law promulgated by KSA Royal Decree No. 1441H (2019).

The former Laws, along with any other sections that were in contradiction with the New Law, will be supplanted by the New Law, which unifies the legislation into one complete document and controls commercial, nonprofit, and professional enterprises.

Key changes have affected the following topics:

• Company types and names;
• Incorporation procedures, Mergers & Acquisitions;
• Managers’ and Directors’ duties and liabilities;
• Audit requirements for Micro & Small Enterprises;
• Shares;
• Interim Dividends;
• Virtual Communications;
• Annual General Meetings (LLC);
• Automatic Dissolution;
• Specific Regulations for Limited Liability Companies.

According to the Regulations, companies must comply with the new requirements within a two-year window after the entry into force date.