Procedures for establishing a joint stock company in the Saudi Arabia and obtaining a license
If you are an investor or entrepreneur and want to establish a joint stock company, in this article we will explain the procedures for establishing a joint stock company in the Kingdom of Saudi Arabia and how to obtain a license.
Initially, what is meant by the company contributing to the Saudi Companies Law is a company whose capital is divided into shares of equal value and negotiable, and the company alone is responsible for the debts and obligations arising from the exercise of its activity, and the company does not practice its activity until after the establishment procedures are completed and the final license necessary for the activity is obtained from the competent authority If the exercise of its activity requires that.
Procedures for establishing a joint stock company in the Saudi Arabia:-
Submit the incorporation application
The application to establish a joint-stock company shall be submitted to the Ministry of Commerce and Industry signed by the applicant or his applicants, and the application shall be accompanied by the establishment contract and its articles of association.
A founder of the joint-stock company is anyone who signs the company’s articles of incorporation, or requests a license to establish it, or provided an in-kind share upon its incorporation, or actually participated in its establishment, with the intention of entering a founder in the company.
Subscription to shares:-
If the founders did not limit the subscription of all shares to themselves, then they must offer the shares that they did not subscribe to for subscription, and the payment of the value of the shares subscribed is deposited in the name of the company under incorporation with one of the licensed banks in the Kingdom of Saudi Arabia, and only the board of directors may dispose of it after Company incorporation announcement.
Obtaining the license to establish a joint stock company:-
The license to establish a joint-stock company shall be by a decision of the Ministry of Commerce and Industry, including the one that establishes it or whose establishment is jointly established by the state or other persons of public legal capacity.
And if the company’s activity requires obtaining approval or a license from the competent authority by order before licensing its incorporation, the decision to authorize the establishment of the company will not be issued except after obtaining that approval or license.
Preparing a report on the in-kind shares for the partners:-
If there are in-kind shares, a report prepared by an expert or certified evaluator must be attached to the incorporation application that includes an estimate of the fair value of these shares. The founders must deposit a copy of this report in the company’s headquarters at least fifteen days before the convening of the constituent assembly, and everyone concerned is entitled to Peruse it.
This report is presented to the constituent assembly for deliberation. If the assembly decides to reduce the fee specified for the in-kind shares, the providers of the in-kind shares must agree to this reduction during the assembly, and if they refuse to approve the reduction, the company’s foundation contract in this case is considered as if it was not for all of its parties .
The Convocation of the Constituent Assembly:-
The founders invite all subscribers to hold a constituent assembly within forty-five days from the date of the Ministry of Commerce and Industry’s decision to authorize the establishment of a closed shareholding company or from the date on which the door to subscribe to shares in the publicly-subscribed joint-stock company is closed, in accordance with the conditions stipulated in the company’s articles of association. Provided that the period between the date of the invitation and the date of the meeting is not less than three days in joint stock companies with closed subscription, and ten days in joint stock companies with a public subscription.
The constituent assembly chooses its president, secretary and collector of votes, and decisions in the constituent assembly are issued by an absolute majority of the shares represented in it, and the association president, secretary and vote collector sign the meeting minutes, and the founders send a copy of it to the ministry, as well as send a copy to the Capital Market Authority if it is a joint stock company Public offering.
Within fifteen days from the date of the end of the meeting of the constituent assembly, the founders submit a request to the Ministry of Trade and Industry to announce the establishment of the company, attaching it to an acknowledgment that the subscription of all the shares of the company has taken place and the amount paid by the subscribers of the value of the shares, the minutes of the meeting of the constituent assembly and its decisions, and the company’s articles of association approved by the constituent assembly .
The Ministry of Commerce and Industry issued a decision announcing the establishment of the joint stock company.
After verifying the completion of all the necessary requirements for the establishment of the joint-stock company, the Ministry of Commerce and Industry issues a decision announcing the incorporation of the company, and the decision is announced on the ministry’s website.
The members of the Board of Directors must, within fifteen days from the date of the decision to establish the company, request that the company be registered in the Commercial Registry.
Thus, the company is considered a valid foundation, and the announcement of the decision announcing the establishment of the company and its registration in the commercial registry entails the transfer of all the actions that the founders made for its account, and the company bears all the expenses that the founders spent on establishing it.
If you want to obtain free legal advice from a corporate lawyer in Riyadh regarding the procedures for establishing a joint stock company in the Kingdom of Saudi Arabia and how to obtain a license .. Al Othman Law Firm are pleased to contact you on: 0535008888
