The new corporate system, which was launched by the Ministry of Commerce last January, enabled the customer or the owner of the establishment to convert the type of his establishment from an establishment to a company, or from a company to a joint stock company, and allowed joint stock companies to convert to a listed one, according to the conditions set by the Ministry.
The new system contributed to the conversion of 2048 establishments, of which 2011 was transformed from an establishment into a company according to the specified criteria. Also, 20 companies were able to convert into a joint stock company, 14 establishments were able to convert into a joint stock company and 3 joint stock establishments were listed during the first quarter of 2023.
The system helped in the growth of financing small and medium enterprises, and developed the transformation of institutions into companies, as it worked on the expansion of companies, and kept abreast of the economic developments taking place in the Kingdom at all levels in order to achieve the goals of Saudi Vision 2030, and provided the possibility of concluding a family charter in the Memorandum of Association that regulates family ownership in the company for its development And its sustainability, in addition to the creation of the simplified shareholding company as a new entity to meet the needs of entrepreneurship.
The system is distinguished by exempting micro and small companies from the requirement of the auditor, in addition to removing restrictions at all stages (incorporation, practice, and exit), as it allows the limited liability company to issue debt instruments or negotiable financing instruments, and also regulates non-profit companies as a possible investment arm for the third sector.
The transformation of individual institutions and companies into closed joint stock companies provides a number of advantages, most notably: better governance and oversight mechanisms, the transition to institutional work, the possibility of listing in the financial market, increased disclosure and transparency, ensuring continuity and expanding the shareholder ownership base and smooth transmission through different generations, and more flexibility to fulfill the value The company's capital upon incorporation and flexibility in trading shares.
The advantages also include a greater diversity of funding sources, enabling minority shareholders to have a representative on the board of directors, avoiding the risks of differences between shareholders and management, in addition to obtaining more benefits from several government agencies.
The new corporate law includes a number of rules that help develop provisions for transformation and merger between companies and allow the division of the company into two or more companies.
Okaz (Jeddah)