Saudi Gazette report

RIYADH — The Saudi Ministry of Commerce revealed that there has been a 68 percent growth in the rate of commercial registrations of companies during the past 20 months since the new Companies Law took into effect.

The law, which came into being on January 19, 2023, has contributed tremendously to the growth of commercial registrations of companies, reaching 389,413 by the end of the third quarter of 2024 from 230,762 commercial registrations before the law came into effect.

The law launched several enablers that serve companies of different sizes. These include facilitating the requirements and procedures for establishing all types of companies; stimulating ownership in companies; enabling the purchase of shares or stakes and establishing a simplified joint-stock company; regulating non-profit companies, as well as allowing the transformation of a sole proprietorship into any of the forms of companies and developing the provisions for transformation and merger; allowing the division of a company into two or more companies and exempting micro and small companies from the auditor requirement; expanding electronic services; attending general assemblies and voting on decisions remotely; removing restrictions at all phases including establishment, practice and exit; concluding a family charter to regulate family ownership in the company, and facilitating the practice of activities and businesses by foreign companies.

The new Companies Law stipulates that the simplified joint-stock company is a new form of company that meets the needs and requirements of entrepreneurship. The law allowed the limited liability company to issue debt instruments or tradable financing instruments.

It also granted companies the freedom to distribute interim or annual profits, provide sources of financing, enable the purchase of shares or stakes, and other enablers that stimulate the business environment and support investment.