Saudi Arabia Update – April 2018

Companies Law amended

The Council of Ministers approved 11 amendments to the Companies Law on 10 April 2018 (the Amendments) – a brief summary is below. Companies established in Saudi Arabia should consider reviewing existing shareholder arrangements, constitutional documents, and corporate governance procedures to ensure compliance with the Amendments. Officers and directors in Saudi companies should also be aware of new risks.

LLCs:

Paid-up capital

The Amendments provide that payment of the entire share capital is not required upon incorporation. This seems to reflect the joint stock company approach – whereby one-fourth of the share capital can be paid on incorporation with the remaining three-fourths paid within the next five years. In practice, this provision will likely only be applicable to wholly Saudi or GCC owned companies – since foreign investors are generally required to produce a bank certificate evidencing deposit of the entire capital as