The Amended Articles of the Corporate Law & the Commercial Registration came in accordance with best practices to improve the Investment Environment in the Kingdom, as announced by MCI

20 Apr 2018
The Ministry of Commerce and Investment pointed out that the new amendments on the regulations of the corporate and commercial registration aimed at enhancing the Kingdom's Competitiveness in the World Bank's Index related to the ease of doing business (The ease of starting-up business and the minority-investor protection index). This would help realizing the objectives of the Kingdom’s Vision 2030; that is by moving the Kingdom to the first top ten ranks in the World Competitiveness Index, as well as to keep pace with the global developments and the best practices to improve the investment environment in the Kingdom.

MCI confirmed that these amendments aimed at facilitating starting-up business through the adoption of secure and easy electronic solutions developed by the Ministry. This would positively affect the Kingdom's rank in the Ease of Doing Business Index. The proposed amendments aim at increasing the protection of the minority shareholders, besides improving their confidence in the relevant corporate, also enhancing their rights and establishing the necessary governance guarantees to encourage them to provide financial support and investment activities, in addition to reassure them that their investments and funds will be secure and protected by the official regulation. This would in turn lead to the development and promotion of corporate through increasing the financing resources.

The most prominent amendments are: regulating and organizing the company’s contracting or dealing with the concerned parties in a very practical way, whereby the Ministry of Commerce and Investment and the Capital Market Authority have the right to set up the necessary regulations and controls to ensure that the interests of the company and the shareholders are taken into consideration.

The amendments aim also to determine the liability of the board member, who has the sole interest, and the board of directors’ members of the joint-stock companies in respect of the transactions of the parties that have unfair relation or that involve a conflict of interest and may do harm to the company. Among the amendments as well is the determination of the principle that the company may bear the charge and expenses incurred by the shareholder to initiate the lawsuit, according to a number of controls, including that the lawsuit is established on a sound basis and in good intention. This is to provide the effective legal means to protect the shareholders' rights.

The amendments also affirm the right of the partner’s emption in the limited liability companies, as well as giving the partners who hold 10% of the company's capital the right to call on the partners' assembly.

Among the amendments as well obliging the Board of Directors, when it is needed, to invite the shareholders to the General Assembly before at least twenty one days, so that to give the shareholders a greater opportunity to prepare for such meetings and to attend them if they wish.

The amendment of the Commercial Registration System aims at ensuring that all the commercial establishments are registered in the Commercial Registration, whatever their capital or legal form is, so that to appear in the market legally and to provide well organized trading environment. Therefore, the regulating bodies can know the size of the market and the number of trade institutions and their activities. Thus improving the organizational decision-making.

It is worth mentioning that the Cabinet has recently approved a number of amendments on the regulations of the Corporate and Commercial Registration to enhance the attractiveness and reliability of the domestic market.

MCI would like to call on all interested parties to review the amendments of the regulations, related to the Corporate and Commercial Registration through having access to the following link:​

Last Modified 26 Dec 2018