SAUDI ARABIA Law and Practice Contributed by: Zain Satardien, Chadi Hourani and Hayel Hourani, Hourani & Partners
JSC A JSC is a corporate entity suitable for larger busi - nesses, particularly those intending to raise capital through public or private offerings. It requires a min - imum of two shareholders (one if the share capital exceeds SAR5 million) and at least three directors. Shareholder liability is limited to the value of their sub - scribed shares. JSCs must maintain a minimum share capital of SAR500,000. Simplified joint stock company (SJSC) The SJSC is designed to meet the needs of start-ups and venture capital initiatives. It requires a minimum of two shareholders and one director. There is no mini - mum share capital requirement, and liability is limited to the value of subscribed shares. Branch A branch is considered a part of its parent entity and does not have a separate legal personality in Saudi Arabia. It does, however, have to follow the Compa - nies Law insofar as it would apply to it. 4.2 Relationship Between Companies and Minority Investors Public companies are primarily regulated by the Com - panies Law, the Capital Market Law, and the Corpo - rate Governance Regulations (CGR) issued by the CMA. These laws and regulations establish protec - tions for minority shareholders to ensure their rights are upheld within public companies. Generally, the CGR provides the following rights to all shareholders: • right to receive profits either in cash or through the issuance of shares; • guaranteed right to company assets upon liquida - tion according to their share; • the right to participate in general or special share - holder assemblies and deliberations, and vote on their resolutions; • the right to freely dispose of their shares in line with the provisions of the Companies Law, the Capital Market Law, and their Implementing Regulations; • the right to enquire and request access to the company’s books, documents, and information regarding its activities, operations, and investment strategies (this is subject to ensuring no prejudice to the company’s interests or breach of applicable
site. Listed companies are obligated to disclose any material developments that may affect their financial position or stock performance, such as mergers, acquisitions, or significant legal actions. Corporate Forms in Saudi Arabia Businesses can operate through various corporate forms under the Saudi Arabian framework. The key forms available under the Companies Law are as fol - lows. General partnership A general partnership requires a minimum of two part - ners. All partners share equal responsibility for man - agement unless otherwise stipulated in the memo - randum of association. The liability of the partners is joint and several, extending to the full extent of their personal assets. Limited partnership This structure involves at least one general partner and one limited partner. General partners bear unlim - ited liability and are responsible for the partnership’s management, while limited partners are only liable to the extent of their capital contributions and are restricted to internal management roles. This struc - ture is suitable for investors seeking limited exposure to liabilities. Single shareholder limited liability company (LLC) A single shareholder LLC is a versatile option allowing sole ownership. The shareholder’s liability is limited to the extent of their capital contribution, and the com - pany must have at least one manager. This structure offers simplicity and control for individual investors or small-scale businesses. LLCs LLCs are the most commonly used corporate structure for private companies in Saudi Arabia. They require between two and 50 shareholders and at least one manager. Shareholders’ liability is limited to their capi - tal contributions, offering significant risk protection. LLCs provide operational flexibility while maintaining limited liability for all participants.
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