Saudi Arabia's Ministry of Commerce and the Capital Market Authority (CMA) revealed the implementation mechanism for the new Companies' Law, which was approved by the Council of Ministers on June 28, 2022. The law, which was published in the official Umm Al-Qura Gazette on July 4, 2022, will take effect on January 19, 2023.

The ministry and the CMA have been working together to ensure the successful implementation of the new law, which aims to achieve integration and harmony. According to the two entities, the new law was approved by Royal Decree on Dhul Hijjah 1, 1443, and its provisions will apply to existing companies within two years from the date of implementation. However, the Ministry of Commerce and the Capital Market Authority may determine the provisions that apply to these companies during this period.

Saudi Arabia's Ministry of Commerce and the Capital Market Authority have clarified the implementation of the new Companies' Law, which will take effect on January 19, 2023. The law will apply to all new companies established after this date, but existing companies will have up to two years to adjust their conditions in accordance with the provisions of the law. During this period, the Ministry of Commerce and the Capital Market Authority may determine the provisions that apply to existing companies.

The ministry and CMA have outlined the provisions that companies must abide by from the date when the law comes into effect, which can be found in a link provided in their statement. Existing companies are not allowed to take any action that is contrary to the law after it comes into effect. Companies, partners, and shareholders may exercise all the rights stipulated in the law from the day it comes into force, but may need to amend their basic laws and articles of incorporation as necessary.

The implementation of the new law is aimed at strengthening the regulatory environment for companies, facilitating procedures and regulatory requirements to stimulate the business environment and attract investment, achieving a balance between stakeholders, and providing an effective and fair framework to corporate governance. It also aims to contribute to the sustainability of economic entities, attracting local and foreign investments, providing sustainable financing sources, meeting the needs and requirements of the entrepreneurship sector, and stimulating the growth of small and medium enterprises.

The new law is expected to stimulate and develop Saudi Arabia's commercial system. It offers flexibility to protect companies and empower the private sector, simplifies the requirements and procedures for establishing companies, and removes many restrictions at all stages, including establishment, engaging in business, and exiting the market. The law also allows for the limited liability company to issue debt instruments or negotiable financing instruments and permits the company to be divided into two or more companies. It also allows the owners of individual entities to transfer their assets to any types of companies.

If you’re planning to build up your business in Saudi Arabia, get in touch with analytixarabia.com and we will be happy to assist you to make these procedures simple.