A comprehensive guide to joint stock companies in the fast paced business world and ever changing economy.
Companies and businessmen are looking for support and advice from financial professionals to achieve their goals and help them plan and make the right strategic decisions.
Here comes our role, CFOONLINE, as an authorized financial office in the Kingdom, to provide you with expertise and innovative and free advisory services that enable you to excel in the market and achieve distinction.
Thanks to a distinguished group of financial experts and consultants with extensive experience, we are committed to providing comprehensive financial support and innovative solutions that meet your individual needs.
Whether you are seeking to establish a new company, or improve the performance of an existing business, we are here to be your reliable financial partner.
The joint stock company in Saudi Arabia: definition and types
A joint stock company is a legal structure that enables a group of shareholders to come together and jointly establish and manage a joint venture company.
The joint stock company is a major source of financing in Saudi Arabia and includes various types, including the following:
- Public joint stock companies
- and private joint stock companies
- and simplified contribution.
The concept of joint stock company and its establishment in Saudi Arabia
A joint stock company is a joint structure that enables investors to share capital and risk in establishing and managing a commercial company.
They are set up by raising investors’ money through the sale of shares representing equity interests. Regulations issued by the Ministry of Commerce specify the procedures and requirements for establishing companies.
Types of joint stock companies and their characteristics
Joint stock companies come in many types including public, private and simple.
- Public Shareholding Company: It allows the public to invest by purchasing shares listed on the stock exchange.
- While the private shareholding company is limited to a specific number of shareholders and usually operates in specific areas.
- Simplified joint stock company: allows the establishment of a company with a small capital and simple procedures.
The system and law of joint stock companies in Saudi Arabia
The Ministry of Commerce regulates joint stock companies in the Kingdom of Saudi Arabia and sets regulations and procedures for their establishment and operation.
Companies must comply with the laws of joint stock companies and provide the required financial reports and disclosures regularly.
Responsibility and management in the joint stock company
The members of the Board of Directors are responsible for managing the affairs of the joint stock company.
This includes:
- Make important administrative decisions
- Preserving the interests of the company and its shareholders.
Responsibilities vary according to each board member’s role.
Rights and duties of shareholders in joint stock companies
Shareholders of joint stock companies are entitled to the following:
- Participate in making important decisions, including electing members of the Board of Directors
- and approval of important amendments to the Articles of Association.
Among their duties are the following:
- pay their financial contributions
- And contribute to the success of the company.
Top related articles:
_Audit Committee in the Saudi listed joint stock companies
_ Companies Law in Saudi Arabia Types of companies and incorporation procedures
_The old corporate system in Saudi Arabia has evolved and transformed
Joint stock company in Saudi Arabia: two case studies
In our article, we will present to you the ideal joint stock companies for joint stock companies in Saudi Arabia.
To learn how to apply the concepts of the joint stock company in Saudi Arabia, let us review two case studies of two Saudi joint stock companies.
-
First: Savola Company
Founded in the year XXXX, it is an example of a publicly traded company. It operates in the food and beverage industry. Shareholders buy shares and participate in making important decisions.
-
Second: Makkah Construction and Development Company
Founded in the year XXXX, it is a private joint stock company working in the field of construction and real estate development.
It was founded by a group of investors who decided to combine their resources to develop successful real estate projects.
Regulations and advertisements for joint stock companies
Corporate governance regulations play a crucial role in regulating and supervising joint stock companies.
These regulations include:
- Standards of transparency, integrity and disclosure that companies must adhere to.
- Besides, the joint-stock companies must submit periodic financial reports and announcements to the concerned authorities and the public.
Conditions for incorporation and conversion of the joint stock company
To establish a joint stock company, you must follow legal procedures that include the following:
- Determine the type of company
- and capital
- and contributors.
When converting a limited liability company into a joint stock company, the following is required:
- Submit a formal application
- and setting up a new platform.
Lapse, dissolution and liquidation of the joint stock company
At the end of the joint stock company’s life cycle, it may no longer be able to continue its business.
The dissolution and liquidation of the company requires:
- Take specific actions to settle assets and liabilities
- Distribution of funds to shareholders according to their shares.
Exiting the partner and selling his shares in the joint stock company
Partners in a joint stock company have the right to get out of the company by selling their shares.
They can sell their shares to other investors or through the stock exchange. The partner must adhere to the legal procedures and specific regulations to achieve this.
Articles of Association of a Saudi closed the joint stock company
The Articles of Association of a closed joint stock company defines the internal rules and regulations of the company.
This system includes:
- Stock distribution
- and powers of the board of directors
- and decision-making mechanisms.
This system can be customized according to the needs of the particular company.
Comparative analysis between the types of joint stock companies
Joint stock companies need to understand the differences and similarities between their different types.
A public shareholding company allows the public to participate easily, while a private company allows specific shareholders to achieve certain goals.
The simplified joint stock company allows the establishment of a simple company with a small capital.
Comparison of the joint stock company between the old and new systems
| feature/aspect | Old system | The new system |
|---|---|---|
| Type of Company | Public or private shareholding company | Public or private shareholding company |
| minimum capital | It may be significantly higher | The minimum capital has been reduced to facilitate the establishment of companies |
| Disclosure and transparency | Low level of disclosure | An increase in disclosure and transparency requirements |
| The maximum number of shareholders | Restrictions on the number of shareholders | The possibility of increasing the number of shareholders |
| Company management and board of directors | restrictions on management structures | Greater flexibility in the formation and management of the Board of Directors |
| General associations | General associations are not included | Enhancing the role of general assemblies and shareholder participation in decision-making |
| Regulations and regulations | A limited legal system | Improvements in laws and regulations to enhance the business environment |
| Facilitating foreign investment | Limited facilities for foreigners | Oriented towards facilitating foreign investment and attracting capital |
| merger and acquisition | Complexities in merger and acquisition procedures | Facilitate mergers and acquisitions and reduce obstacles |
What is the difference between a private and a public shareholding company?
| feature/aspect | The public shareholding company | The private shareholding company |
|---|---|---|
| Funding advantage | It can attract the largest number of shareholders and attract large capital | Attract specific shareholders and limited capital |
| Management and Board of Directors | A board of directors consisting of shareholders and other representatives | Flexibility in forming the board of directors according to the company’s needs |
| General associations | General associations play an important role in making decisions | General assemblies are not bound by the same decision-making role |
| Trading on the stock exchange | It enables public trading and attracts larger investments | They are often not listed on the stock exchange and are private |
| Disclosure and transparency | Subject to stricter and more transparent disclosure requirements | Enjoy a degree of privacy in information and disclosure |
| Minimum capital | The minimum capital is higher in general | Minimum capital can be lower in own |
| merger and acquisition | Require complex procedures for mergers and acquisitions | It can be easier and faster to own because of its flexibility |
| Laws and regulations | Subject to specific laws and regulations | It allows flexibility in organizing and managing its structures |
| foreign investors | Foreign investors can participate and invest | Certain permits and restrictions are required for foreign investors |
| Company resources | Funds from the public can be directed to finance projects | It relies on appointed shareholders to finance the activities |
What is the difference between a public joint stock company and a closed the joint stock company?
| aspect/feature | Public joint stock company | Closed joint stock company |
|---|---|---|
| The number of shareholders | The number of shareholders can be large | The number of shareholders is usually limited to a specific group |
| Stock trading | Shares can be traded on the stock exchange according to the general rules | Normally you cannot trade stocks on the stock exchange |
| privacy | The company’s information and performance are more transparent and disclosed | Enjoy a higher degree of privacy and control |
| capital | The minimum capital of the company is high | The minimum capital can be less and more flexible |
| Shareholder responsibility | Shareholders’ liability is limited to the value of their shares | Shareholders’ liability is limited according to their shares in the company |
| merger and acquisition | Require complex procedures for mergers and acquisitions | Mergers and acquisitions are usually easier |
| Company ownership | The public can own and co-own the shares of the company | Ownership of a company is usually limited to a certain group of shareholders |
| Purposes and objectives | It aims to expand the financial base and attract large investments | It aims to achieve specific goals for a specific group of shareholders |
| Laws and regulations | Subject to specific laws and regulations of public joint stock companies | It has a degree of flexibility in organizing its structure and operation |
Joint Stock Companies Law: Latest Amendments and Developments
The law of joint stock companies in Saudi Arabia is constantly evolving to keep pace with economic and legal developments.
The latest amendments focus on the following:
- Enhance corporate transparency
- and protect the rights of shareholders.
Companies must abide by the provisions of the law and update their policies and regulations based on the new amendments.
Among the most important articles that many search for:
_ Types of companies in the new system of companies in Saudi Arabia
_ The new corporate system 1444
_ Free WhatsApp legal advice in Saudi Arabia
The most common questions about joint stock companies
-
What is a joint stock company and what are its types?
A joint-stock company is a legal structure in which investors participate by purchasing shares. Their types include general, special and simplified.
-
What are the procedures required to establish a joint stock company?
The procedures include specifying the type of company and capital, submitting the required documents, and complying with the regulations.
-
What are the civil responsibilities of the members of the board of directors of the joint stock company?
Members of the Board of Directors must abide by the interest of the company, abide by laws, and make administrative decisions.
-
What are the steps to convert a limited liability company into a joint stock company?
You must submit an official application, prepare a new platform, and follow the specified transfer procedures.
-
What are the procedures for liquidating a joint stock company?
The procedures include settling assets and liabilities and distributing funds to shareholders.
-
How can a partner get out of a joint stock company?
A partner can sell his share by following the sale procedures and complying with the regulations.
-
What are the differences between a public and private shareholding company?
Public allows the public to participate, while private is limited to a specific group of contributors.
-
What is the importance of the joint stock companies law?
The laws and regulations of joint stock companies define the rules and procedures for establishing and operating them in a legal and orderly manner.
-
What is the economic role of joint stock companies?
Joint stock companies contribute to revitalizing the economy and providing investment opportunities and financing for large projects.
-
What is a closed joint stock company?
A closed joint stock company is one that specifies a specific number of shareholders and is not normally open to the public, allowing for control and privacy.
-
How did Al-Rajhi become a title for Al-Rajhi Bank as a joint stock company?
By providing shares to the shareholders, Al Rajhi became a common property among a wide range of individuals, which made it the title of the bank as a joint stock company.
-
How is the subscription and fulfillment in the joint stock company?
Subscription: The process of purchasing shares by investors to participate in the capital.
Loyalty: Payment of the value of subscribed shares that contribute to the capital.
-
What are the essential differences between a general partnership and a joint stock company?
Solidarity Company: Shareholders jointly liable for debts and obligations.
Joint Stock Company: Shareholders responsible for the size of their shares and limited liability.
Summary and conclusion: the importance and impact of joint stock companies in Saudi Arabia
Joint stock companies play an important role in revitalizing the economy and financing large projects in Saudi Arabia. It allows investors to participate in business and offers various investment opportunities.
To ensure their success, these companies must adhere to laws and regulations and apply best practices in their management and operation.
We, CFOONLINE, are here to support you in building a bright and sustainable future. We proudly offer our services as an authorized financial office to be part of your success and development.
We fully understand the importance of customizing financial solutions to suit each client’s needs and that is why our services are unique and innovative.
With us, CFOONLINE, you will not find just a financial office, but a strategic partner that aims to maximize your potential for success and growth.
The most important sources:
