Joint Stock Companies
Joint Stock Companies in terms of incorporation licensing are two types:
a.Companies licensed by Royal Decree.
◦Franchise Companies.
◦Those which run public utilities.
◦Those which receive state subsidy.
◦Those in which the state is a shareholder except Social Insurance and Retirement Pensions Department.
◦Those which are engaged in banking.
Except for the above joint stock companies a license shall be issued by the Minister of Commerce.
b.Joint Stock Companies in terms of capital subscription are two types :
◦Companies in which founders subscribe part of the corporate capital and the rest is offered for public subscription. Such companies may not have corporate capital less than 10 million Saudi Riyals.
◦Companies in which founders subscribe all their corporate capital. Such companies may not have corporate capital less than two million Saudi Riyals.
The Documents Required to Apply for License Incorporation are:
a.Economic feasibility study proving the feasibility of the company incorporation unless submitted to another authority that gave license thereto.
b.Application signed by five of the founders of the company requesting licensing addressed to the Minister of Commerce. The application shall show how capital is subscribed, number of stocks restricted to founders, and the amount of subscription by each of them.
c.Articles of association.
d.Company statute in accordance with Regulations for Joint Stock Companies.
Summary of the procedures to be taken for incorporating joint stock company:
1.A letter addressed to His Excellency the Minister of Commerce is sent requesting initial approval of the company's incorporation. If approved then the next step is taken.
2.The application for the establishment of the company shall be submitted by five founders, attached to the application is the economic feasibility study.
3.Draft articles of association and draft statute of the company shall be made.
4.These shall be examined by the Ministry and after approval thereof, the founders shall submit a certificate from a bank establishing that the deposited capital has been paid.
5.Articles of association of the company shall be referred to a notary public to inscribe them in his records.
6.After inscribing the company contract with the notary public the founders or the Legal Counsel of the company shall file a petition to issue a Royal Decree or ministerial decision licensing the establishment of the company.
7.A published royal decree or ministerial decree in the official gazette.
8.If part of the company's stocks is placed for public subscription, a request for initial public offering and subscription application shall be prepared in accordance with Article (55) of the Regulations for Companies within thirty days of the date of publication referred to in the previous item and after public offering of stocks and allocation.
9.Studying draft allocation rates.
10.A constituent assembly of the company shall be held to look unto its agenda (mentioned in the Regulations for Companies), and shall be announced in daily newspapers and the Official Gazette and to be held after fifteen days from the date of publication of the invitation.
11.Founders shall submit an application to the Minister of Commerce to announce establishment of the company accompanied by the following:
◦The company Statute endorsed by the Constituent Assembly.
◦Notarized articles of association.
◦Minutes of the meeting of the Constituent Assembly signed by the President and its secretaries.
12.A decision by His Excellency the Minister of Commerce shall be issued announcing the creation of the company.
13.Commerce minister's decision announcing establishment of the company and articles of association with its statute shall be published in the official gazette.
14.Company stakeholders shall request entry into commercial registration after the Board of Directors appoints its Chairman and Chief Executive Officer.
15.The company shall be entered into commercial registration after completion of the respective forms and payment of the fees levied on the company i.e. 8000 Saudi Riyals every five years.
Courtesy: Ministry of Commerce & Industry, KSA
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TThis English language text is not an official translation and is provided for information purposes only. In the event of any discrepancies between the English translation and the Arabic original, the Arabic original shall prevail.The reader is solely responsible for the use of the information contained herein.
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