First of all, the company is: a contract whereby two or more persons are obliged to contribute to a profit-oriented project by providing a share of money, work or both to share the profit or loss arising from this project
Types of commercial companies in Saudi Arabia, according to the system:
– Solidarity Company.
– Simple Recommendation Company.
– Al Sahma Company.
– Simple Shareholding Company.
– Limited liability company.
Any company that does not take any of these forms is null and void.
– Highlights of the new corporate system:
– Facilitating the conduct of companies’ business from its founding to its liquidation. The system was also keen to align with the bankruptcy system
– The new corporate system allowed for the possibility of concluding a family charter to be in the * incorporation contract * leading to the regulation of family ownership in the company and the employment policy regarding the distribution of profits and the employment of relatives.
– The introduction of a new name for the service of entrepreneurs under the title of “Simplified Shareholding Companies”, a company founded by one or more persons, one of the most important advantages of which is that it does not require a minimum capital of the company in its statute, which is one of the latest types of companies in the world at present.
– The new system allowed limited liability companies to issue debt instruments or financing instruments supporting trading
– Allowed one company to split for two or more companies and develop the terms of transformation and merger between companies.
– Exempting small and micro enterprises from the requirement
The auditor, and microenterprises, comprise employment of 1-5 or sales not exceeding 3 million riyals. Small enterprises include employment of 6-49 or sales of more than 3 million and less than 40 million. Medium enterprises include employment of 50-249 or sales of 40 million and less than 200 million.
– The division or fragmentation of shares into shares with lower nominal value, or their merger so that their shares represent a higher nominal value.
– Allow the company to distribute profits to partners and shareholders whether the profits are phased or annual.
– Develop various means of resolving disputes and disputes by resorting to arbitration or alternative means that seek to settle matters to the parties’ satisfaction, including: the establishment of committees competent to consider irregularities in the Ministry of Commerce and the Financial Market Authority.
– Facilitate the process of adopting financial lists without the need to return to parent companies.
– Addressed the problem of foreign investments that were receiving temporary licences in terms of the mechanism for the continuation of companies and their conversion into permanent companies.
– To make provisions for converting debt instruments and financing instruments into equity when they meet certain conditions, or a specified period of time has elapsed.
The competent authority to examine irregularities in the corporate system: the Ministry of Commerce and the Financial Market Authority.
What has the new # Corporate System added for solidarity companies?
Allow the company to remain as a public asset in the event of the death of a partner or in the case of a single solidary partner, indicating the procedures to be followed during that period.
Permit the establishment of special mechanisms and procedures in the appointment, dismissal or retirement of the solidarity partner or the managing partner and the assessment of their equity shares.
The possibility of including in the incorporation contract other discretion mechanisms
How has the new # Companies _ system contributed to the development of joint stock companies?
– The establishment of joint stock companies owned by a person without restrictions is permitted with flexibility, without limiting the establishment to the State, persons in a public legal capacity, wholly State-owned companies and companies with at least 5 million riyals in capital.
– Facilitates the establishment procedures and requirements by deciding to obtain a single consent and not to require the convening of a constituent assembly.
– The maximum number of board members has been eliminated so that shareholders may limit the number of board members in the company’s base system.
– Limiting board membership to natural persons, and not allowing a board member to be a legal person
– Cumulative voting for the election of board members is limited to shareholding companies listed in the financial market.
– The issuance of shares is precluded by the possibility of issuing multiple classes of shares with varying rights to common shares, shares and redeemable shares.
– Allow shareholders to agree to sell and buy minority shares
– Eliminate restrictions on the trading of shares and give the CMA the power to place restrictions on the trading of shares in shareholding companies that wish to be listed on the financial market, and the possibility of agreeing to include in the company’s base system restrictions on the trading of shares, provided that it would not be an absolute prohibition of such trading.
– The requirement of a regular reserve requirement for the Ras’ money, with the possibility of agreeing to set aside a certain percentage of net profits, and the possibility of forming other reserves in the interest of the company or to ensure the distribution of fixed profits to shareholders.
The new # Companies _ System ensures that small and limited liability companies such as small enterprises are exempted from restrictions on their work by:
- Allow the establishment of a company of one person.
- Allowing them to finance themselves through the issuance of debt instruments or negotiable financing instruments contributing to supporting and solving funding problems for this type of project.
- Within the project is to organize the distribution of periodic profits to partners under certain conditions.
- Emphasize the separation of the company’s debts and obligations from each partner’s private financial liabilities .