Al-Marsad newspaper – SPA: The new corporate system approved by the Council of Ministers today contributes to stimulating and developing the commercial system, and is characterized by high flexibility to protect companies and empower the private sector.
The system aims to enhance corporate sustainability, support investment in small and medium-sized companies by facilitating regulatory procedures and requirements, achieve greater diversity in the market by adding new corporate entities, raise the level of flexibility in the systems, preserve the rights of customers, reduce disputes and ensure fair treatment between stakeholders.
The new corporate regulation has been prepared in light of international best practices; To address all the challenges facing the business sector, in partnership with many bodies from the public or private sectors, and to seek the opinions of professional bodies, international organizations and specialized consulting offices.
System goals
The new corporate regulation regulates all provisions relating to companies, both commercial companies, non-profit companies and professional companies; This is to ensure the availability of these provisions in a single legislative document, and by taking one of the following forms: General Partnership Company, Simple Partnership Company, Joint Stock Company, Simple Joint Stock Company, and Limited Liability Company.
The system enables the conclusion of a family charter that regulates family ownership in the family business, its governance and management, work policy, employment of family members, distribution of profits, exit, and others. To ensure the sustainability of these companies, in addition to exempting micro or small companies from the auditor requirement.
Creating a new form for companies
A new form of company has been created called the “Simplified Joint Stock Company” that meets the needs and requirements of entrepreneurship and venture capital growth.
It will also serve as an investment arm that enables non-profit companies to advance the third sector, stimulate social responsibility, and allow them to generate a return on their business and spend it on non-profit purposes.
The new system reduced the statutory requirements and procedures for small, medium and micro companies. It also simplified the requirements and procedures for establishing companies, and gave flexibility to include special terms and conditions in the incorporation contracts of companies or their articles of association, and created possible mechanisms for entrepreneurs, venture capitalists, and private ownership.
The system removed many restrictions at all stages (incorporation, exercise and exit), as well as restrictions on company names, and allowed the limited liability company to issue debt instruments or negotiable financing instruments.
The system developed the provisions of transformation and merger between companies, allowed the company to be divided into two or more companies, and allowed the owners of individual institutions to transfer their assets to any of the forms of companies.
Issuance of different types of shares
To attract investment, the system allowed the issuance of different types of shares with varying categories and rights, privileges or restrictions, and the possibility of issuing shares allocated to employees to attract and motivate talent. It also allowed the distribution of profits temporarily or annually with governance that ensures that the company’s creditors obtain their rights.
The system also made it possible to implement procedures electronically through modern means of communication “remotely”, including submitting incorporation applications, attending general assemblies of shareholders or partners, and voting on decisions.
It provides means for resolving disputes and disagreements by resorting to arbitration or other alternative means to settle them, in addition to developing provisions for the liquidation of the company and facilitating its procedures, in line with the provisions of the bankruptcy system.