SAUDI ARABIA Law and Practice Contributed by: Dana Halwani and Leanne Farsi, Derayah LLPC
Non-Compliance . Once the Investment Registration Certificate has been obtained, the shareholders must submit the company’s draft articles of association to the MOC for review and approval. Issuance of the arti - cles of association and commercial registration certifi - cate (which are electronic), and the publication of the articles of association take place in one step once the relevant invoice for this service has been paid. The timing for incorporating a company from the date of receiving the Investment Registration Certificate up to the issuance of the commercial registration certifi - cate is usually five to ten business days, if the draft articles of association do not deviate too far from the standard articles issued from time to time by the MOC. The duration of the commercial registration is one year and the commercial registration is renewed annually. Once the commercial registration certificate is issued, the company is incorporated and must complete the post-incorporation registrations with the following government authorities: • the Ministry of Municipal and Rural Affairs; • the Ministry of Human Resources and Social Development; • the General Organisation for Social Insurance; and • the Zakat, Tax and Customs Authority (ZATCA). The company may also need to obtain additional approvals from other relevant authorities regulating its activities, depending on the business it will be carrying out. The time to complete these post-incorporation procedures varies widely depending on what registra - tions with government authorities are required. 3.3 Ongoing Reporting and Disclosure Obligations Any amendments to the articles of association of a company must be submitted to the MOC for review and approval. This includes any change in sharehold - ing, any increase or decrease in the capital of the company, or any change to the activities of the com - pany. Furthermore, the names of the general manager or members of the board of directors are included in the commercial registration certificate of a company, so any change in management must be reported to
rejected, reapply, providing the reference number of their first application, and any information or docu - ments not submitted before which would warrant a re-evaluation of the application. 3. Corporate Vehicles 3.1 Most Common Forms of Legal Entity The new Companies Regulation (Royal Decree No M/132 of 1 Dhul Hijja 1443 Hejra corresponding to 30 June 2022) and its Implementing Rules came into effect in January 2023, replacing the Companies Reg - ulation (Royal Decree No M/3 of 28 Muharram 1437 corresponding to 10 November 2015), the Profession - al Companies Regulation (Royal Decree No M/17 of 26 Muharram 1441 Hejra corresponding to 25 September 2019) and the Implementing Rules of the Professional Companies Regulation which were issued on 23 April 2020. Companies incorporated in Saudi Arabia are usually incorporated as limited liability companies (LLCs) or joint stock companies (JSCs). An LLC can be owned by a single person, and there is no limit on the maxi - mum number of shareholders. There is no minimum share capital requirement for LLCs, but the capital of a company must be sufficient for carrying out the com - pany’s activities. A JSC can be incorporated by one or more persons, whether natural persons or corporate entities. The JSC’s capital on establishment must be sufficient to achieve its object, and in any event must not be less than SAR500,000. Under the 2022 Companies Regulation, a new form of entity called a “simplified joint stock company” can also be created. A simplified joint stock company can be incorporated by one or more persons, and there is no minimum share capital requirement for such com - panies. 3.2 Incorporation Process The first step towards incorporating an entity with non- Saudi shareholders is obtaining an Investment Regis - tration Certificate from MISA, as further detailed under 2.2 Procedure to Obtain Approval and Sanctions for
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