RIYADH — The Saudi Capital Market Authority met with the members of the Board of Directors of joint stock listed companies as well as the executive management in the companies whose accumulated losses reached or exceeded half of its paid capital.
The meetings' discussed Article 150 of the new Companies Law related to the procedures that must be followed when a company's accumulated losses reaches 50 percent or more of its paid capital. It was also noted that the amending period ends on April 22, 2017.
The procedures of Article 150 of the new companies law included the following procedures for the companies with accumulated losses up to 50 percent or more of its paid capital:
• Any auditor or company official should inform the Chairman of the Board of Directors once he knows that the company's accumulated losses reached 50 percent or more of its capital.
• The Chairman should inform the Board immediately. Within 15 days of knowing, the Board should call for a meeting with the extraordinary general assembly within 45 days.
• The extraordinary general assembly should decide to either increase or decrease the company's capital –according to the Companies Law and other related rules and regulations – to a degree where the percentage of losses would decrease below than 50 percent of the capital or dissolute the company before the deadline in its Law.
Under the new Companies Law, the company is terminated by law in any of the following cases:
• If the extraordinary general assembly does not meet during the specified period above.
• If a meeting was held, but was unable to pass a resolution.
• If it was decided to increase the capital as stated above, but no one subscribed in the capital increase within 90 days from the issuance of the resolution to increase the capital.
As previously announced, CMA is working on amending the instructions and procedures related to listed companies with accumulated losses up to 50 percent of its capital or more to go in line with the new Companies Law. The amended instructions and procedures will be announced once approved by the CMA Board.
The Authority emphasized that it will take into account the rights of shareholders and investors in these companies which would be reflected in the transparency and disclosure of the Capital Market and increase the efficiency and fairness of trading in the shares of listed companies. — SG
