Saudi Arabia Enforces New Corporate Regulations: Companies Given Two-Year Compliance Deadline

News from MEAI
|
06.05.2024

In compliance with the regulations of the Ministry of Commerce, all companies operating in the Kingdom of Saudi Arabia are required to amend their articles of association to align with the new companies system outlined in Royal Decree No. (M/132) dated 01/12/1443 AH and its executive regulations as per the decision of His Excellency the Minister of Commerce No. 284 dated 23/06/1444 AH. The Ministry of Commerce has stipulated a maximum period of two years from the date of issuance of the decision for all companies to comply with the new system.

This new companies system introduces several key reforms aimed at enhancing the regulatory framework, improving the ease of doing business and promoting greater transparency and accountability within the corporate sector. The amendments required under the new system include, but are not limited to:

  1. Corporate Governance Enhancements: Companies must adopt improved corporate governance practices, ensuring a higher level of oversight and accountability in their operations.
  2. Shareholder Rights: The new system strengthens the rights of shareholders, providing them with greater protection and a more significant role in corporate decision-making processes.
  3. Financial Disclosures: Enhanced requirements for financial disclosures will ensure that companies provide more comprehensive and transparent financial information to stakeholders.
  4. Compliance Mechanisms: Companies are required to establish robust compliance mechanisms to ensure adherence to the new regulations, including regular audits and reporting.
  5. Penalties for Non-Compliance: The Ministry of Commerce has outlined specific penalties for companies that fail to comply with the new system within the stipulated timeframe, including fines and potential suspension of business activities.

To facilitate the transition, the Ministry of Commerce is providing support and resources to companies, including detailed guidelines, workshops, and advisory services. Companies are encouraged to begin the amendment process as early as possible to ensure timely compliance and to avoid any disruptions to their operations.

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