The Ministry of Commerce and Industrial declared on 9 November 2015 that the new Companies Law (NCL) will come into force after 150 days of its publication in the Saudi Official Gazette.

According to the new law only one shareholder will be able to create a Limited Liability Company whereas previously at least two shareholders were required to do so. In certain situations shareholders will no longer be responsible if the accumulated losses of the company exceed 50% of the company’s share capital. In fact the company will have to dissolve it if the General Manager or Board does not take necessary steps to resolve the situation. The LLC will be converted into a joint stock company within one year if the number of shareholders in an LLC exceeds 50. If not the LLC company will be regarded as dissolved under the NCL provided that the increase in the number of shareholders was not as a result of an inheritance or provisions of a will.

On the other hand the minimum number of shareholders required for a Closed Joint Stock Company has been reduced from five to two shareholders.

Although, the Government, public juristic persons and companies totally owned by the Government, companies with minimum capital of SAR5 million will be able to create a one-person Joint Stock Company with full authority of the shareholders assemblies, including the foundation assembly. The minimum capital requirement for Joint Stock Companies has been reduced from SAR2 million (US$533,362) to SAR500,000 (US$133,340). The minimum number of members for the boards of directors is 3, with a maximum of 11 and the requirement for owning a specific minimum number of shares of the relevant company will no longer exists. In all situation the compensation paid to a director shall not exceed SAR500,000. Also, the first financial year will not be less than 6 months and not more than 18 months.