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Saudi Arabia Updates Corporate Requirements for Closed Joint Stock Companies - Requires Submission of Shareholder Registers Within One Month

Client Updates

On 23/07/1441 H (corresponding to 18/03/2020 G), the Ministry of Commerce in the Kingdom of Saudi Arabia (the “Kingdom”) issued a circular addressed to all closed joint-stock companies in the Kingdom (the “Circular”).

The Circular states that all closed joint-stock companies must comply with Article 109 of the Companies Law. This Article stipulates that a joint-stock company must prepare and maintain a register of shareholders, which must contain the following information about each shareholder in the company:

  1. name;
  2. nationality;
  3. address of residence;
  4. occupation;
  5. number of shares; and
  6. the paid portion of the shares [held by such shareholder].

The Circular goes on to state that the shareholders’ register must be submitted to the Ministry of Commerce via its website within thirty (30) days from the date of this Circular (i.e., by 17 April 2020 G at the latest). Further, any subsequent updates to the shareholder register of a closed joint-stock company must also be submitted to the Ministry via the same website within thirty (30) days of such update.

The Companies Law imposes a penalty of up to five hundred thousand Saudi Arabian riyals (SAR 500,000) for each instance of non-compliance with requests from the Ministry of Commerce to provide documentation required under the Companies Law or non-compliance with instructions (such as the Circular) issued by the Ministry. Repeated non-compliance with this requirement may lead to a doubling of the penalty imposed.

This Circular comes against the backdrop of increasing supervision by the Ministry of closed joint-stock companies in the Kingdom. The Circular does not apply to forms of corporate structures in the Kingdom other than closed joint-stock companies.

Our clients who are shareholders in, or are constituted as, closed joint-stock companies in the Kingdom, whether 100% Saudi-owned or with a foreign shareholding, should prepare a shareholders’ register (or update the shareholders’ register if one is already in place) in accordance with Article 109 of the Companies Law and submit the new or updated shareholders’ register to the Ministry of Commerce via its website by no later than 17 April 2020.

We are happy to advise any of our clients if they would like to receive further information on this matter or would like assistance in preparing the required form of shareholders’ register and share certificates.

This client update is provided for information only and is not intended to constitute legal advice. The Law Office of Mohanned bin Saud Al Rasheed advises its clients in the Kingdom in association with Baker Botts L.L.P.

 

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