The Saudi Ministry of Commerce reported a remarkable 68% surge in company registrations over the past 20 months. This unprecedented growth follows the implementation of the new Companies Law, which took effect on January 19, 2023. By the end of the third quarter in 2024, total commercial registrations reached 389,413, compared to 230,762 prior to the law’s enactment.
Simplified Procedures Fuel Business Expansion
The Companies Law introduced mechanisms to streamline processes and encourage business ownership across all company types. These include simplifying requirements for company establishment, allowing share purchases, and creating the simplified joint-stock company structure. Sole proprietorships now have the option to transition into corporate entities, while regulations for mergers and transformations were also enhanced.
Reforms under the new law extended to nonprofit and foreign companies, making operations within Saudi Arabia more seamless. Micro and small companies were exempted from auditor requirements, while electronic services, such as online meetings and remote decision-making, expanded significantly.
Enhanced Investment Environment Encourages Growth
The law granted companies flexibility to distribute interim or annual profits and issue tradable debt instruments. It also introduced family charters to support family-owned businesses, simplified restructuring processes, and eased the dissolution of companies.
These reforms aim to strengthen Saudi Arabia’s business ecosystem, stimulate entrepreneurship, and attract foreign investments, aligning with the kingdom’s economic vision.
