The private sector is a strategic partner in building strong economies for countries around the world, to which Saudi leaders attach great importance to pushing the wheel of growth to higher levels, through the implementation of regulations and laws that stimulate the private sector and aimed at addressing challenges, especially with regard to the establishment stage in terms of length The procedures and restrictions imposed on companies, especially small and medium enterprises, which constitute the largest tariffs, and others also related to financing and obligation to have them around financial auditors and other issues that have caused controversy from time to time, whether in boards or on social networking sites through campaigns launched by owners. These facilities, which forced the Ministry of Commerce to work on the implementation of a new system for commercial companies in which it will cover the loopholes of its previous system, which was issued seven years ago, specifically in the month of November (November) 2015.
With the release of the new system for commercial companies in Saudi Arabia, it has distinguished itself from its predecessor by addressing many loopholes and giving companies, especially small ones, the necessary flexibility to continue their commercial activities.
Problems of the previous regime
The new system included the exemption of micro or small companies from the auditor requirement, in addition to reducing the requirements and statutory procedures for small, medium and micro companies, including the removal of many restrictions at all stages (incorporation, practice and retirement), as well as restrictions. on company names, and has allowed the company with limited liability by issuing negotiable debt instruments or financial instruments.
Under the system, the statutory requirements and procedures for small, medium and micro companies were reduced, the requirements and procedures for the formation of companies were simplified, and flexibility was granted to special provisions and conditions in the companies’ articles of association or articles of association. to close. association, and possible mechanisms have been created for entrepreneurs, venture capital owners and private owners, with the aim of increasing their participation rates in output. current time.
Here, Fadl Al-Buainain, a member of the Shura Board, said, “Facilitating the procedures and regulatory requirements is one of the features of the new system, which strengthens the micro, small and medium business sector and achieves sustainability in the corporate sector. . “
Note that the system has dealt with the aspect of non-profit companies and it is important to support the non-profit sector and achieve growth in it. It also covered the type of companies, including the General Partnership Company, the Simple Partnership Company, the Joint Stock Company, the Simple Joint Stock Company and the Limited Liability Company.
He pointed out the old corporate system and its incompatibility with the variables of the commercial system and the requirements of the current stage, and its urgent need to replace it with a system that complies with the requirements of international trade regulations, achieve competitiveness , procedures for commercial activities, and obtain legislative protection for them.
He added, “The modernization of the legislative structure in general and the legislation relating to trade regulations is one of the most important stimuli for the commercial system and its development, achieved through the new system, which will increase Riyadh’s competitiveness. increase in terms of legislation, completion of regulations and ease of commencing commercial activities. ” Emphasize that the current system contributes to the development of the trading system.
He said, “It also addresses some of the challenges of the private sector, including the challenges of family businesses, as it will regulate family ownership in the family business, its management and governance, employment policies, employment of family members, profit sharing. and the challenges of small businesses in which business initiatives are active, the acquisition of legal protection for them and the achievement of justice in litigation. ” on a legislative basis.
In turn, economic analyst Jamal Bannoun pointed out that “the new system for companies has many benefits, including several types of companies, the most important of which were small and medium-sized. Therefore, it was difficult for this company to grow, and it remains so. a long period of time until it changes from a small facility to a large company. ”
background of your accounts
Bannoun believes that the exclusion of small and medium-sized companies from the requirement to appoint an auditor is due to giving these companies confidence to keep their accounting files, especially since there are many laws, regulations and laws that directly affect these companies are linked, which means that the percentage manipulation of numbers will be very small.
He added, “It is well known that Saudi Arabia tends to give more confidence to small and medium enterprises with financing facilities from funds and financing programs. This step will remove weak and meager companies from the market if they do not meet the standards. of the accountant. “
Multiple classes of stocks
He further said: “What distinguishes the decision is its approval of the simplified joint stock company system, which deals with small and medium enterprises, so that one individual can establish a company from one or more people, and this matter was difficult in The self-employed can also establish a professional company with an independent legal personality.
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In the same context, Bannoun indicated that the new system has removed the constraints that hinder companies, especially at the time of establishment or retirement, and there are mechanisms that highlight the capabilities of entrepreneurs and capital owners.
He said, “One of the features of the new system for companies is to allow limited liability companies to issue debt instruments and tradable financing instruments. The system also took into account the provisions of transformation and merger between companies and the company is allowed to be divided into two or more companies, and this will help a lot in restructuring companies and ensuring their continuity.The new system has canceled the value The nominal value is ten riyal (about $ 2.67), as was the case, and joint-stock companies may divide their shares into shares of nominal value or merge.In general, the new system is flexible and easy for several companies operating in Saudi Arabia.
He noted that it is a catalyst for foreign companies to enter into partnerships and inject investments in various fields, especially that the simple stock company system has been developed to meet the needs of entrepreneurs, and it helps a company of to establish one person and more. .
a single legislative document
In a related context, Trade Minister Majed Al-Qasabi confirmed that the system addresses all the challenges facing companies in general, especially family businesses and entrepreneurs.
According to the Minister of Trade, the importance of the new system lies in its comprehensiveness and its collection of forms and types of companies (commercial companies, professional companies, non-profit companies) in a single legislative document, and this facilitates the establishment, sustainability and expanding companies, encouraging bold investment, and addressing all the challenges facing family businesses and entrepreneurship.
In turn, Al-Buainain indicated that the new system would improve Riyadh’s entrepreneurship competitiveness, saying: “The new system has been issued and there are several changes, whether global or local, regarding the development of private economic sectors, and the system is in line with those changes, especially because it is prepared according to best international practices and is compatible with global trade regulations so that there is no conflict between it and the global system, which affects the competitiveness of the Saudi economy at the international level.
At the same time, he pointed out that the new system is characterized by flexibility that supports the corporate system in the country, especially since the previous regime suffered from some shortcomings and problems that limited the overall development of the commercial companies sector.
Al Buainain added: “The commercial investment sector is a major driver of the economy, so it needs integrated legislation that keeps pace with global changes in investment systems.”
Features of the system
In a related context, the new system of commercial companies is characterized by all the provisions related to the business entity, whether commercial, non-profit or professional, by regulating a single legislative document, provided that it is one of take the commercial forms. such as a partnership company, a simple partnership company, or a joint stock company, or a simplified joint stock company, or a limited liability company.
A new form of company has also been created under the name “Simplified Joint Stock Company”, which meets the needs and requirements of entrepreneurship and the growth of venture capital.
The new system laid the foundation for family businesses, which would enable them to conclude a family charter that regulates family ownership in the family business, its management, governance, employment policy, family service, profit sharing, retirement and others, to ensure sustainability to insure from these companies.
It also made it possible to implement procedures electronically by modern means of communication “remotely”, including the filing of incorporation applications, the attendance of general meetings of shareholders or partners, and the voting on decisions.
In the field of commercial dispute resolution, the system has provided means to resolve it using arbitration or other alternative means of resolving it, in addition to developing provisions for the liquidation of the company and the facilitation of its procedures, in accordance with the provisions of the bankruptcy system in the country.
The new system also allows the issuance of different types of shares with different categories and rights, privileges or restrictions, the possibility of issuing shares granted to employees to attract and motivate talent, and the allocation of powers to make profits distribute, whether on a temporary or annual basis, through management that ensures that the company’s creditors acquire their rights.
One of the advantages of the new system is that it developed the provisions of transformation and merger between companies, allowed the company to be divided into two or more companies, and allowed the owners of individual institutions to transfer their assets to any of the types of companies.