The Saudi Arabian authorities recently announced that the New Companies Law, a set of new companies regulations approved by the Council of Ministers and the Shura Council earlier this year, will come into effect in May 2016. The New Companies Law replaces the 1965 Companies Law which is the main source of codified legislation governing the establishment, operation and liquidation of corporate vehicles under Saudi Arabian law.   

The new law represents some significant changes and modernizations to the existing companies law regime from 1965. While some changes will have limited impact for foreign investors doing business in the Kingdom, others have the potential for significant impact.  A detailed review by our Saudi Arabia team of the key changes will feature in the January edition of Lexis Nexis Middle East Law Alert.   

Examples of some of the key updates include changes to the number of shareholders and minimum paid-up capital for Joint Stock Companies (JSCs), the approval of "One Person" companies, reductions to statutory reserve requirements for Limited Liability Companies and JSCs, and changes to the rules governing the dissolution of companies for excessive losses.  

Companies doing business in Saudi Arabia will likely benefit from the new law and from the increased attention by the Saudi Arabian authorities on regulations affecting companies operating in the Kingdom. Such companies can increase their profitability and reduce their risks by leveraging the New Companies Law with the advice of experienced counsel.