Investment in Saudi Arabia: What Rights do Shareholders have?

by | Feb 25, 2019 | Investment | 0 comments

February 25, 2019

Investment in Saudi Arabia: Commercial companies play a significant role in the development of a country’s economy. Also of importance is the rights of shareholders because it determines the number of people willing to invest their money in the industry. In the recent past, there has been increased interest in investment in Saudi Arabia. You just don’t invest in any country blindly; here are some things you should know about when it comes to shareholders rights in Saudi Arabia.

The most important rights that all common shareholders possess include the right to share in the company’s profitability, income and assets, a degree of control and influence over company management selection, preemptive rights to newly issued shares, and general meeting voting rights.

• In Saudi Arabia, Limited Liability companies can be formed with one shareholder. Previously, the minimum requirement was two. However, the current law prohibits the sole shareholder of a Limited Liability Company from holding another sole shareholder position in a different LLC.

• In case a company loses more than 50 percent of its capital, and shareholders have failed to take measures within a given period, the company will be dissolved according to the law.

• According to the new law, confidentiality should apply to all shareholders in regards to what they know about the company.

• Transfer of shares in Joint Stock Companies (JSC) is much simpler than before. Such shares are recorded in a particular share register that is held by the company.

• Shareholders in Joint Stock Companies (JSC) are allowed to take legal action in case the company does not meet certain conditions.

• A minimum of 2 shareholders can now form a JSC. Furthermore, one shareholder has the right to form a JSC with a minimum capital of SAR 5 million.

• Shareholders have the right to nominate the company’s board members according to their ownership percentage

Need advice regarding investment in Saudi Arabia.
Visit Nasreen Alissa Law Firm

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