As part of a wider economic modernisation drive, Saudi Arabian authorities have implemented a new companies’ law. It will come into force on May 2 this year.
The law will introduce watershed changes to bring the corporate framework in line with international best practices. Restrictions on establishing limited liability (LLC) and joint stock (JSC) companies have been eased, and significant new powers will be bestowed upon both the Capital Markets Authority (CMA) and Ministry of Commerce, which regulate public and private companies respectively.
"People are generally very excited, it's a very positive development," said Khalid Al-Abdulkareem, managing partner of Clifford Chance’s Riyadh office. He explained that giving the CMA the mandate to impose penalties on listed companies - an indication of a tougher approach - will ensure compliance.
The companies’ law is the latest piece in a suite of new provisions opening the Saudi market to foreign investors. In...