Saudi Arabia's new Companies Law took effect on 19 Jan 2023; the deadline for existing companies ended on 18 Jan 2025. Key rules and what to review now.
Short answer: The new Companies Law was issued by Royal Decree No. M/132 dated 1/12/1443H and took effect on 19 January 2023. It replaced the 1437H Companies Law and the Professional Companies Law. Existing companies had two years to bring themselves into line; the Ministry of Commerce set the deadline at 18 January 2025. If your company has not amended its articles, act now.
If you are a partner in an LLC formed before 2023, or you run a family business, your questions are practical: is our old contract still valid, did we miss the deadline, and what should we add or change? This article does not repeat the company types, which we cover in Company Formation in Saudi Arabia: Types and Pitfalls. It focuses on what the new law provides and what it means for an existing company. For a review of your own articles, see our corporate lawyer service.
When was the law issued and when did it take effect?
According to the Bureau of Experts, the law was issued by Royal Decree M/132 (1/12/1443H, 30 June 2022) and Council of Ministers Resolution 678, and published on 22 July 2022. Article 281 brings it into force 180 days after publication, which the Ministry of Commerce states was 19 January 2023. Article 280 replaces the 1437H Companies Law and the 1441H Professional Companies Law, so professional companies are now governed within the Companies Law itself. Under Article 277, the Minister and the Capital Market Authority board issue the implementing regulations, which the Ministry publishes alongside the law.
What are the key features?
Simplified joint-stock company (SJSC): one of the five forms. Shareholders organise the structure in the bylaws (Art. 138), the minimum capital of a joint-stock company does not apply (Art. 139), and it can be formed by one person (Art. 150).
Partners' agreements and family charters (Art. 11): founders, partners or shareholders may sign a binding agreement, including how their heirs enter the company, or a family charter covering family ownership, governance, employment of family members, dividends, share transfers and dispute resolution. It may form part of the articles but must not contradict the law or the articles.
Directors' duties (Arts. 26–27, 30): managers and board members owe duties of care and loyalty. Except for forgery and fraud, a liability claim is not heard after five years from the end of the financial year of the harmful act, or three years from the end of the manager's or member's term, whichever is later.
Auditor exemption (Art. 19): micro and small companies need not appoint an auditor unless, among other cases, their articles require it or holders of at least 10% of voting shares request one in writing.
Professional, non-profit and holding companies each have their own chapter.
LLC rules that matter to partners
An LLC may be formed by one person; a single-owner LLC has bylaws instead of articles (Arts. 156–157).
Each partner's votes equal their shares, and this cannot be varied. A non-managing partner may inspect the books twice a year, and the company must respond within 15 days (Art. 171).
The articles may refer partner and manager disputes to arbitration, except criminal matters (Art. 173).
Shares carry equal profit rights unless the articles say otherwise (Art. 175).
A partner selling to an outsider must notify the others through the manager, and each partner may buy the share within 30 days; the articles may set other procedures, valuation methods or longer periods. This pre-emption right does not apply to transfers by inheritance, will or court order (Art. 178).
If losses reach half the capital, the manager must call the partners' general assembly within 60 days to decide whether to continue, with remedial steps, or dissolve (Art. 182).
The compliance window and what its expiry means
Item Three of the Royal Decree required companies existing at entry into force to adjust within no more than two years. The Ministry of Commerce announced the deadline as 18 January 2025 and said it would take statutory measures against non-compliant companies afterwards. The window has closed; the specific consequence depends on the law's penalty provisions and the authority's decision.
In January 2023 the Ministry and the CMA clarified that the window never covered new companies, provisions carried over from the 1437H law, the offences and penalties in the new law, or procedural obligations. Provisions applying from day one included accounting records (Art. 17), auditor duties (Art. 20(2)), care and loyalty (Art. 26), conflicts of interest (Art. 27) and the business-judgment rule (Art. 31).
Articles can be amended online through the Saudi Business Center using the Ministry's "amend articles of association / bylaws" service. Conditions include an active, unsuspended commercial registration and, for joint-stock companies and SJSCs, an extraordinary general assembly or shareholders' resolution.
What to review in your articles today
Are the current articles amended and registered? Amendments cannot be relied on against third parties until registered.
Is there a partners' agreement or family charter, and does it conflict with the articles?
How will heirs enter the company? Pre-emption does not apply to inheritance.
Are the default transfer procedure and 30-day period enough?
Is any non-pro-rata profit split written into the articles?
Do you want an arbitration clause?
Are the manager's powers clearly limited?
Do the articles require an auditor, cancelling the small-company exemption?
For relationships that go beyond the articles, see our guide to the two-party partnership agreement.
Illustrative example only: three brothers own an LLC formed in 2018 whose articles are silent on heirs, profits and disputes. One dies and his shares pass to his heirs with no pre-emption right for the others. When they disagree on profits, the default rule of equal rights per share applies. A partners' agreement or family charter would have shortened the dispute.
FAQ
Is the old Companies Law still in force?
No. Article 280 replaces the 1437H law and the 1441H Professional Companies Law and repeals conflicting provisions.
Yes. The sole owner has the powers of the manager and the general assembly, decisions are recorded in writing, and the company has bylaws instead of articles.
Does an SJSC have a minimum capital?
The joint-stock minimum capital does not apply; the bylaws set the issued and paid-up capital.
Does every company need an auditor?
No. Micro and small companies are exempt unless one of the listed exceptions applies, including a requirement in their articles or a written request by holders of at least 10% of the voting shares.
Is your company's contract aligned with the new law?
The deadline has passed, but the clauses that settle disputes between partners and heirs are tested at the first conflict. Our licensed lawyers review articles and partners' agreements for companies across Saudi Arabia, in person and remotely.
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Disclaimer: This article is general information about the Saudi Companies Law and is not legal advice for a specific case. Outcomes depend on the company form, its articles and the facts, so consult a qualified lawyer before acting.
