The Kingdom of Saudi Arabia’s (the “Kingdom”) M&A environment is governed by a combination of corporate, market, competition, and foreign investment regulations. The Capital Markets Authority (“CMA”) (relevant only to public M&A transactions), General Authority for Competition (“GAC”), Ministry of Investment Saudi Arabia (“MISA”) and the Ministry of Commerce (“MOC”) are the principal regulatory bodies noting always that additional sector-specific regulators may be involved depending on the industry or sector (for example, healthcare, financial services, education etc).

• GAC is the authority responsible for enforcing the Kingdom’s Competition Law and ensuring that markets operate fairly and efficiently;
• CMA is financial regulatory authority in the Kingdom responsible for supervising, regulating, and developing the Kingdom’s capital markets, including the Saudi Exchange (Tadawul).
• MISA is the central authority for foreign investment in the Kingdom. It is responsible for issuing licenses to foreign investors, granting sectoral approvals, and facilitating investment processes; and
• MoC manages the registration of companies, ensures commercial compliance, and is the key enforcement body for the Companies Law.

As a general position, the applicable rules and regulations applicable to the implementation of an M&A transaction are:

• The Merger & Acquisition Regulations issued by the CMA (applicable only to public M&A transactions);
• Companies Law (Royal Decree No. M/3) and its Implementing Regulations: This law is the foundational legal framework that regulates the formation, operation, and dissolution of various company types, including those used for joint ventures. It also governs corporate actions such as mergers and acquisitions.
• Investment Law (Royal Decree No. M/19) and its Implementing Regulations: This law specifically governs foreign investments in the Kingdom. It ensures equal treatment for foreign investors, provides key protections, and grants access to incentives. The law also outlines the compliance requirements for foreign entities, including registration, investor rights, and any sector-specific conditions; and
• The Competition Law (Royal Decree M/75) and its Implementing Regulations: This law governs, protects and encourages fair competition in the Kingdom, aims to combat monopolistic practices that harm lawful competition and seeks to promote market efficiency.

In addition to the above and depending on the relevant industry/sector of the transaction, other relevant laws or regulations may apply.

M&A transactions (both public and private) constituting an economic concentration where turnover and other thresholds are met, require notification to and clearance from the GAC for transactions with the GAC having the power to impose conditions, block transactions, or levy significant penalties for non‑compliance, reflecting the increasing importance of merger control in deal planning.

Public M&A transactions involving companies listed on the Saudi Exchange (“Tadawul”) are governed by a well‑defined legal and regulatory framework centered on the Capital Market Law, which establishes the Capital Market Authority (the “CMA”) as the primary regulator of public companies and securities markets; the core rules for public M&A are set out in the CMA’s Merger and Acquisition Regulations (the “MARs”), which apply to (i) any transaction that results in a person owning or controlling 10% or more of a listed company’s voting shares; or (ii) any offer that would increase an offeror’s ownership to 10% or more of that class of voting shares. The MARs also regulate matters such as disclosure, offer timetables, pricing, mandatory offer triggers, equal treatment of shareholders, restrictions on dealings during the offer period, and restrictions on frustrating actions by the target board.

These regulations operate alongside the Companies Law, the Implementing Regulations of the Companies Law, and the Implementing Regulations of the Companies Law for Listed Joint Stock Companies, which govern the corporate mechanics of mergers, shareholder approvals, voting thresholds, directors’ duties, and statutory merger processes, as well as the Listing Rules, Market Conduct Regulations, the Rules on the Offer of Securities and Continuing Obligations, and the Instructions for Companies’ Announcements, all of which are particularly relevant to disclosure requirements and standards, insider trading restrictions, and reverse takeovers.

On 6 January 2026, the CMA amended the Rules for Foreign Investment in Securities to remove the QFI regime and discontinue the swap‑agreement framework, opening Saudi‑listed shares to direct investment by all foreign investors (subject to foreign‑ownership limits and sectoral restrictions), effective from 1 February 2026. Accordingly, public M&A transactions involving a foreign bidder must consider compliance with these amended rules, in addition to any Ministry of Investment of Saudi Arabia (MISA) or sector‑specific approvals.

Saudi Arabia’s private M&A market continues to show strong levels of activity aligning with Vision 2030 goals. This sustained level of strong activity has also been supported by government led diversification efforts (including privatization projects in the energy, logistics, infrastructure and technology sectors) as well as legal reforms which have created greater levels of legal certainty and increased levels of confidence from both domestic investors, regional investors and foreign investors when investing in Saudi Arabia (both directly and indirectly).

As part of Vision 2030, there has been a focus on diversifying the Saudi economy away from a reliance on oil and gas resulting in increased levels of activity in the following sectors: renewable energy, infrastructure, healthcare, financial services, technology and advanced manufacturing.

Public M&A in the Kingdom today sits on a well‑established, credible, and fully operational regulatory foundation. The CMA has developed and maintained a comprehensive merger and acquisition regime for listed companies since 2007. This framework has been tested in practice and has successfully supported several high‑profile transactions, demonstrating the functionality and enforceability of the public M&A system.

From a historical perspective, public M&A activity involving Tadawul‑listed companies has occurred episodically and in concentrated waves, rather than as a steady flow of takeover bids. The most visible period of activity was between 2019 and 2021, during which a number of significant listed‑company combinations were completed, particularly through statutory mergers and securities‑exchange offers. Transactions including the merger of Saudi British Bank (SABB) and Alawwal Bank, the merger of the National Commercial Bank (NCB) and Samba Financial Group, and a series of insurance‑sector consolidations illustrate that changes of control in listed companies have been affected under the MARs, resulting in the delisting of the target. These transactions confirm that the Saudi public M&A framework is not merely theoretical, but capable of supporting complex, large‑scale transactions involving public shareholders.

At the same time, market practice has consistently favored negotiated, board‑supported merger structures over classic public takeover bids addressed to all shareholders. Open tender offers, whether voluntary or mandatory, have not been a feature of the Saudi public M&A landscape to date. Instead, public M&A has most commonly been implemented through shareholder‑approved mergers, where both parties’ boards recommend the transaction and approval is obtained through extraordinary general assemblies rather than through market‑wide acceptance mechanics. This structural preference reflects the ownership profile of many Saudi listed companies, where controlling or cornerstone shareholders play a decisive role. However, it has certainly been our experience that very recently a handful of prospective foreign bidders for companies listed on the Saudi Exchange have been willing to explore the possibility of launching a tender offer under the MARs.

In the current environment, public M&A remains infrequent relative to private M&A and to the overall scale and liquidity of the Saudi Exchange. Listed‑company transactions tend to manifest as statutory mergers, intra‑group restructurings, or acquisitions executed at the shareholder‑approval level, rather than through offers made to the full free float at a premium to the prevailing market price.

Overall, public M&A has to date primarily functioned as a mechanism for structured consolidation and agreed control changes, rather than as a frequent tool for contested takeovers or market‑driven control shifts. This has to date resulted in a market where public M&A activity has been limited in volume, reflecting a clear distinction between the robustness of the framework and the measured way in which it is used in practice.

From a regulatory and market‑conditions perspective, the environment for public M&A is now more predictable and institutionally robust than in earlier years, following updates to the Companies Law, the MARs, and the GAC’s merger control framework, which together have improved legal certainty but also increased execution discipline and timelines.

We are seeing a focus on strategic industries and targets for the Kingdom including financial services, food security, infrastructure, healthcare, information and communications technology with a particular emphasis on data centres and digital infrastructure.

We anticipate that implementation and achieving the objections of Vision 2030 will continue to drive M&A activity in the Kingdom over the next 2 years and beyond.

In addition to the impact of Vision 2030, we expect foreign investment into the Kingdom to continue to increase with investors continuing to look at opportunity and developing markets across the Middle East thanks as well to legal developments which have improved legal certainty.

Finally, we are anticipating an ever-increasing focus on and shift towards tech, data and infrastructure assets driving M&A activity, including potential consolidation opportunities.

In Saudi Arabia, the acquisition of a publicly traded company may be effected through a limited number of mechanisms under the MARs and the Companies Law, with market practice strongly favoring negotiated and board‑supported structures. The principal means are mergers (by way of absorption or by way of forming a new legal entity), takeover offers (voluntary or mandatory), partial offers, and securities exchange offers, each subject to CMA oversight and shareholder‑protection rules. It is important to note that stake-building or private transactions may occur outside a formal MARs “offer”.

The most commonly used mechanism to date is the statutory merger effected by way of a securities‑exchange (share‑for‑share) offer, pursuant to the Companies Law and the MARs. Under this structure, the acquiring listed company issues shares to the shareholders of the target in exchange for their shares, following approval by the CMA and by the extraordinary general assemblies of both companies. Upon completion, the target’s assets and liabilities transfer to the surviving entity and the target is delisted from Tadawul. This mechanism has been used in several high‑profile transactions, particularly in the banking and insurance sectors, and represents the dominant form of public M&A in Saudi Arabia.

A second mechanism is a takeover offer, which may be voluntary or mandatory. A voluntary takeover offer would involve an offer made to all shareholders of the target company to acquire their shares, either for cash, shares, or a combination of both. A mandatory takeover offer may be required where an acquirer (alone or together with persons acting in concert) crosses specified control thresholds, in which case the CMA may require an offer to be made to the remaining shareholders on prescribed terms. While the MARs expressly provide for takeover offers, open tender offers have to date not been a feature of the Saudi market.

A third mechanism is a partial offer or negotiated acquisition of a significant stake, subject to CMA approval. Under this approach, an acquirer makes an offer to acquire a specified percentage of a class of voting shares, without seeking full ownership. If successful, this may result in effective control  without a full takeover, although further regulatory consequences (such as mandatory offer obligations) may be triggered depending on the level of control acquired

For private M&A there is limited publicly available information relating to a target. Whilst it is possible to access limited corporate details, this is not always consistently available, and the extent of the information is dependent on the entity type (for example shareholder details will not be available for a closed joint stock company).

There is no legal obligation to provide target information to a potential buyer.

The extent of the legal due diligence undertaken is driven by the parties to the transaction but is typically extensive in nature covering typical topics (corporate, regulatory, employment, contracts, real estate, IP/IT, data protection and litigation). The scope of the due diligence is normally tailored to reflect the transaction and the target’s business (including its geographical scope).

Subject to any specific delegation of authority or power of attorney, the decision to sell a target company will sit with its shareholders, both legally and practically speaking (especially where the target company is a limited liability company).

It is permissible in the Kingdom to include drag along and tag along rights in a company’s constitutional documents which should, on their face, be enforceable. In the absence of drag along or tag along rights and notwithstanding anything to the contrary in any existing shareholders’ agreement, the approval of all selling shareholders will be required where a target company is a limited liability company (this is on the basis that the notary public or MOC official will want all relevant parties to execute the amended articles of association). Where a target company is a closed joint stock company or a simplified joint stock company, the applicable share transfer provisions and requirements will be set out in the bylaws (and may be supplemented by a shareholders’ agreement to the extent that it does not contradict the provisions set out in the bylaws).

Subject of course to any arising actual or potential conflict of interest, the shareholders of the target company do not have any duties or obligations. The directors of the target company have, in the ordinary course, the following duties and obligations:

• duty of care and loyalty;
• duty to avoid conflicts of interest;
• duty to comply with the Companies Law and with the company’s constitutional documents;
• duty of independnence and informed decision making;
• a prohibition on the misuse of company assets and opportunities; and
• a duty to maintain oversight and proper management.

No, this is not relevant in the Kingdom.

Conditionality is generally a feature in every M&A transaction in the Kingdom due to the manner in which shares are transferred in the Kingdom. The extent of the condition’s precedent will be driven by:

• the entity type of the target company and any specifics relating to the share transfer itself;
• the required regulatory conditions (which shall include any required filing with the GAC, any MISA registration requirements and any other applicable regulatory approvals); and
• any findings arising from due diligence and which need to be addressed prior to completion.

Entering into an exclusivity agreement or including an exclusivity period within other initial transaction documentation is a common feature of bilateral M&A processes and even competitive M&A processes once a bidder is down to the final round. From an enforceability perspective, the parties should consider the appropriate governing law and jurisdiction of the relevant agreement.

Whilst we sometimes see break fees being included or “no-shop clauses”, these are not a common feature for M&A transactions in the Kingdom. If these are included, the parties should consider the appropriate governing law and jurisdiction applicable to the relevant agreement.

The most common forms of consideration are cash and shares (which will be issued as in-kind consideration) or a combination of the two.

Any person must notify the Saudi Exchange if such person becomes the owner of, or is interested in, 5% or more of any class of voting shares or convertible debt instruments of the issuer at the end of the third trading day following the execution of the transaction or the occurrence of the event which results in such ownership or interest. The notification must also include a list of persons, in which those persons, have an interest in the shares or convertible debt instruments which they own or control.

In the event of any change to the list of persons referred to above, including any event which requires the inclusion of a person to that list or the exclusion of any person who has been previously included in that list. Such notification must be made at the end of the third trading day following the occurrence of the relevant event.

The above 5% test governs market‑wide substantial shareholding disclosure, as prescribed by the Rules on the Offer of Securities and Continuing Obligations.

Particularly in the context of a public M&A transaction, the MARs introduce additional control‑related thresholds that can trigger offer obligations or restrictions (and, as a result, deal‑driven announcements and filings).

If the acquiror is a related party of the issuer (e.g., significant shareholder, director, affiliate), the issuer’s announcements and circulars must prominently disclose that relationship under the continuing‑obligations framework.

In practice, parties frequently sign and announce a non‑binding memorandum of understanding (MOU) at an early stage to agree terms addressing, inter alia, confidentiality and exclusivity, and to facilitate the exchange of information for reciprocal due diligence. Given that an MOU to evaluate a potential merger / acquisition is generally considered price‑sensitive by issuers, issuers often disclose it as a material development on the Saudi Exchange. If needed, the parties announce MOU extensions while diligence and negotiations continue, or the expiration of the MOU, if no extensions are agreed between the parties. These disclosures are made under the Rules on the Offer of Securities and Continuing Obligations, which require companies to announce material developments (which can extend to MOUs, although not in itself, an automatic disclosure requirement).

When the parties move from an MOU to a binding merger / implementation agreement, issuers announce the signing on Tadawul as a material development, since execution of a binding agreement is market‑moving, even if the MARs offer period has not yet begun. This announcement often appears at (or immediately around) the time the bidder is ready to make the MARs firm‑intention announcement.

Under the MARs, the mandatory public disclosure trigger is the announcement of a firm intention to make an offer; that announcement opens the offer period and activates the formal timetable (submission of the final offer document to the CMA, CMA approval, publication of the offer document and the offeree board circular, convening of the EGMs where applicable, earliest permitted closing date, last dates to revise or declare the offer unconditional, etc.). The MARs further prescribe specific circumstances in which a public announcement is required, including but not limited to, upon an acquisition of shares by a person which gives rise to an obligation to make a “mandatory offer” (as may be determined by the CMA).

Disclosures may also be required if there is a leak, loss of confidentiality, or abnormal price / volume movements that could mislead the market, in which case a clarificatory announcement is made to preserve market integrity. In addition, all announcements made must clearly disclose any related parties involved in the transaction and must meet the minimum disclosure requirements prescribed by the Instructions for Listed Companies’ Announcements.

For private M&A transactions there is no maximum time period for the due diligence process or for the negotiation of the transaction terms/documentation. This will be determined between the parties to the transaction.

For public M&A transactions (subject always to the response below), there are no time limits applicable to due diligence or negotiation of the transaction terms.

Where a transaction constitutes an “offer” under the MARs (i.e. a mandatory / voluntary offer or a securities exchange offer), a statutory timetable applies. A few key highlights of the statutory timetable are as follows:

• Once a firm intention announcement is made, the offeror must submit an offer timetable to the CMA within 3 days.
• The MARs impose mandatory deadlines for each stage of the offer, including publication of the offer document (within 3 days of approval by the CMA), publication of the offeree board circular (within 14 days of the offer document), the last date to declare the offer as unconditional as to acceptances (within 60 days of the offer document), and the last date for satisfaction of all conditions (within 21 days of the offer having been declared unconditional as to acceptances).
• If the offer is not made unconditional by the last permitted date under the MAR timetable, it lapses, unless the CMA grants an extension.

Therefore, for public offers, the timing is capped by regulation, subject to CMA discretion.

For M&A transactions not structured as public offers (e.g. disposals, share purchases that do not constitute an “offer”, etc.) or for private M&A transactions, the legal framework does not prescribe a maximum completion deadline following announcement. The issuer must promptly disclose material developments and update the market if completion is delayed, explaining the reasons. Timing in such cases is driven by contractual long‑stop dates, regulatory approvals (e.g., competition clearance) and commercial considerations.

Yes. Under the MARs, a minimum offer price effectively applies in the following situations:

i. Mandatory offers: Where a “mandatory offer” is triggered, and the CMA then requires an offer to be made to the remaining shareholders, the offer must, in respect of each class of shares of the offeree company, be in cash or be accompanied by a cash alternative at not less than the highest price paid by the offeror, or persons acting in concert, for shares of that class during the offer period and within 12 months prior to its commencement. Additionally, where a public announcement is required to be made upon an acquisition of shares by a person that gives rise to “mandatory offer”, and where an offeror has purchased shares at more than the offer price, or otherwise acquires any other interest in the shares giving it control of the voting rights of such share, during the period commencing from this announcement being made until the end of the offer period, it must increase its offer to not less than the highest price paid for the shares acquired during that period.

ii. Minimum-level payment obligations in relation to a firm offer announcement: The MARs draw a clear distinction between (i) purchases made before the announcement of a firm intention to make an offer; and (ii) purchases made after a firm intention to make an offer, during the offer period. Each scenario can set a minimum price floor:

• Pre‑firm‑offer announcement: When an offeror has purchased shares in the offeree company within the three month period prior to the announcement of the firm intention to make an offer, or within such longer look‑back period as the CMA may determine in its discretion, the offer to the shareholders of the same class must not be on a price less than the price of the purchase made prior to the announcement of firm intention.
• Post‑firm‑offer announcement: If, during the period commencing on the publication of the firm intention announcement until the end of the offer period, an offeror has purchased shares at more than the offer price, or otherwise acquired any other interest in the shares, giving it control of the voting rights of such shares, it must increase its offer to not less than the highest price paid for the shares acquired during that period.

iii. Cash offers: In the event where shares of any class in the offeree company are purchased in exchange for cash by an offeror (or any persons acting in concert) during the offer period or in the 12 months prior to it, the offer for that class must be in cash or accompanied by a cash alternative at not less than the highest price paid by the offeror (or any persons acting in concert) for shares of that class during the offer period or in the 12 months prior to it.

Saudi law does not contain a general statutory prohibition equivalent to the “financial assistance” rules found in other jurisdictions. Accordingly, as a matter of principle, a private company or a listed company could theoretically provide financial assistance (for example, by way of loans, guarantees or the provision of security) to support the acquisition of its shares.

However, the ability of a company to provide such financial assistance is itself limited under Saudi law. A company may only undertake activities within the scope of its objects as set out in its bylaws, and, where such activities are regulated, subject to obtaining the necessary regulatory approvals or licenses. The provision of financing, particularly in the form of loans, is not typically within the scope of activities of non-financial listed companies and is also considered a regulated activity requiring an appropriate license. As a result, many companies would not, in practice, be permitted to provide financial assistance in the form of loans, and even the provision of guarantees or security may raise questions as to whether such actions fall within the company’s permitted activities.

In addition, the ability to implement financial assistance arrangements is further constrained by the combined effect of the Companies Law and the Corporate Governance Regulations. Any such arrangement would typically require the offeree to enter into contractual commitments or deploy its assets for the benefit of the bidder. From a governance perspective, this raises fundamental considerations under the Companies Law and Corporate Governance Regulations, pursuant to which the board is required to act in the best interests of the company and to exercise its powers with due care and loyalty. Accordingly, it may be difficult for the board to demonstrate that providing financial assistance in connection with the acquisition of the company’s own shares is consistent with these duties and obligations to act in the best interests of the target company.

These constraints operate alongside the specific restrictions imposed under the MARs (applicable to listed companies only); in particular, the MARs restricts the offeree from undertaking certain actions without prior shareholder approval (whether during the course of an offer, or even before the date of the offer if the board of the offeree company has reason to believe that a bona fide offer might be imminent), including entering into contracts outside the ordinary course of business. Financial assistance arrangements (such as loans, guarantees or the provision of security) would typically fall within this category, as they involve the company entering into contractual commitments outside its ordinary course of business.

The restrictions mentioned above collectively produce an outcome that is functionally equivalent to a prohibition on financial assistance in the context of a public takeover.

The most commonly used governing laws for M&A transactions in the Kingdom are the laws of the Kingdom or the laws of England and Wales. The selected governing law will be negotiated and agreed between the parties (noting that in limited circumstances applicable law may dictate that the laws of the Kingdom shall apply).

In the context of acquiring a Saudi listed company, the public‑facing documentation a buyer must produce depends on whether the transaction constitutes an “offer” under the MARs:

• Where the acquisition is structured as a cash takeover, mandatory offer or securities exchange offer, the buyer is required to make a firm intention announcement setting out the identity of the offeror, key commercial terms, consideration structure, conditions and financing arrangements, followed by submission of an offer timetable to the CMA within three days; the buyer must then publish a CMA‑approved offer document containing full terms of the offer, information on the buyer and its group, strategic rationale, financing details, acceptance mechanics and settlement procedures, and must issue ongoing public announcements during the offer period relating to revisions, acceptances, satisfaction of conditions, extensions or lapse of the offer, culminating in announcements of offer results and completion.
• Where the offer involves share consideration, additional public‑facing documentation is required, including prospectus‑level disclosures, shareholder circulars and listing or admission documentation for the new shares.

By contrast, where the acquisition is not structured as an “offer” pursuant to the MARs (e.g. a negotiated acquisition or share purchase below offer thresholds), the buyer is generally not required to publish standalone transaction documents, and public disclosure is primarily driven by the target company, with the buyer’s obligations typically limited to its own material transaction announcements if it is listed and to substantial shareholding notifications once relevant ownership thresholds are crossed; in such cases, timing and disclosure are driven by contractual long‑stop dates, regulatory approvals and ongoing material‑development disclosure requirements rather than a prescribed offer framework.

For an LLC, legal title to the shares transfers only once the MOC updates the target company’s Commercial Register. This update occurs after the amended articles of association or bylaws are executed and published on MOC’s ejournal (Aamaly). Because an LLC’s ownership structure is set out in its articles or bylaws, any share transfer must be documented through an amendment to those documents, and the amendment application must, in most cases, first be approved through the Saudi Business Center (“SBC”) portal (noting that in certain cases a manual application is still required).

Although the Companies Law permits amendments with 75% shareholder approval, in practice all shareholders — including the transferor and transferee — must sign the amended articles before the SBC official (noting that drag along rights and tag along rights should be enforceable if they have been properly reflected in the articles of association or bylaws). A share purchase agreement is usually entered into to set out the commercial terms and the steps to complete the filings, but this agreement does not itself transfer legal title to the shares.

For a CJSC, legal title transfers when the transferee is recorded in the shareholders’ register maintained by the Ministry of Commerce, which is the authoritative record of ownership. A share transfer does not require amending the bylaws unless it affects matters governed by them, such as the board composition or a change between single‑shareholder and multi‑shareholder status. If a bylaws amendment is necessary, it must be first approved by an extraordinary general assembly.

As with LLCs, a share purchase agreement is typically used to document the commercial terms, and when no bylaws amendments are needed, the documentation is usually limited to updating the shareholders’ register.

In transactions involving non-GCC shareholders, the parties must ensure that the necessary foreign investment registration certificate issued by MISA is obtained or amended before submitting any filings to the SBC.

There are no transfer taxes, stamp duties or registration duties payable in Saudi Arabia in connection with the transfer of shares in an LLC or CJSC.

However, the transaction may trigger capital gains tax for the transferor under Saudi tax laws.

No. So far as we are aware, there have been no hostile acquisitions in the Kingdom.

Please see response above. [Note: Would suggest removing this question]

Pursuant to the Saudi public-M&A framework, where a person (or persons acting in concert with it) increase an aggregate interest in shares through a restricted purchase of shares or restricted offer for shares so that such person’s ownership (individually or collectively with persons acting in concert with it) becomes 50% or more of a given class of shares listed on Tadawul carrying voting rights, the CMA shall have the right to exercise its discretionary power to order such person (and any person or persons acting in concert with it) to offer to purchase the shares of the same class from all remaining shareholders on no less favorable terms than the highest price paid in the preceding 12 months, reflecting the policy of minority shareholder protection upon a transfer of control.

Additionally, where a person has acquired ownership, individually or collectively with any person acting in concert therewith, of 90% or more of voting shares of the company either directly or indirectly, or has unconditionally contracted to acquire that percentage, the following shall apply:

• Sell‑out right: Any other shareholder may, within 90 days from the prescribed disclosure, require the person holding (or unconditionally contracted to hold) a 90% stake to purchase their shares; and said person must make an offer within 30 days of the request (certain pricing rules are applicable, as addressed in our response to question number [3] above).
• Squeeze-out offer (subject to CMA approval): A person holding 90% (or unconditionally contracted to hold) may apply to the CMA for approval to compel the remaining shareholders to sell their shares; the application must include the draft offer proposed to the shareholders, including the details and terms of the offer, as well as the purchase price indicating the basis for price determination. If the CMA approves, the buyer must submit the offer to the remaining shareholders within 30 days of approval.

The exact rights of minority shareholders will depend on both the entity type and the terms agreed between the shareholders to govern their arrangements post-acquisition. Please note that shareholders’ agreements are permissible and enforceable to the extent only that they comply with the terms of the Companies Law and do not contradict the terms of the constitutional documents.

As a general position, limited liability companies (“LLC”) are viewed as providing greater protection for minority shareholders compared with closed joint stock companies or simplified joint stock companies. This is on the basis that, in almost all circumstances, all shareholders (including transferring and non-transferring shareholders in the case of a share transfer) will need to execute any amendment to the articles of association which deal with key matters such as share capital, board composition, shareholder and board voting (including any reserved matters at board or shareholder level). This is notwithstanding the position under the Companies Law which states that amendments to the articles of association of an LLC require the approval of 75% of the shareholders of the LLC. The only anticipated exception to the position where all shareholders need to execute the amended articles of association is where the shareholders are looking to enforce the terms of a drag along or tag along (to the extent that these have been properly reflected in the articles of association).

Generally, closed or simplified joint stock companies are preferred by majority shareholders given that there are comparatively fewer protections afforded to minority shareholders, not least that amendments can be made to the bylaws of the company with the approval of two thirds of the shareholders.

All shareholders, regardless of entity type, will have the right to be invited to a shareholder meeting but depending on the entity-type and the terms agreed in the constitutional documents and any shareholders’ agreement, they may not have to be present in order to constitute a quorum (whether under applicable law or as agreed between the shareholders and reflected in the constitutional documents and/or the shareholders’ agreement) or their vote may not be required in order to approve resolutions.

The only mechanism available to compulsorily acquire a minority shareholder’s stake in a private company is a drag along right, however, this must have been properly approved and reflected in the constitutional documents of the company in order to be relied upon. It should further be noted that whilst drag along rights are expressly provided for under the Companies Law, the enforcement of the same will be dependent on the discretion of the MOC officials at the Saudi Business Centre.

In relation to public companies, please see the response above. Outside the 90% ownership threshold (and absent CMA approval), Saudi law does not provide a general mechanism for compulsory acquisition of minority stakes in listed companies.