The New Saudi Companies Law 2025: The Complete Guide

The New Saudi Companies Law represents a significant milestone in the Kingdom’s legal and economic reform journey, aligning with Saudi Vision 2030 and its objectives to create a dynamic, transparent, and investor-friendly business environment.

This modern legal framework not only enhances flexibility and competitiveness but also fosters innovation, supports entrepreneurship, and strengthens corporate governance across all sectors. By addressing previous regulatory gaps and introducing new company structures, the law sets a solid foundation for sustainable economic growth and global market integration.

New Saudi Companies Law

The new Saudi companies law was introduced in line with the Kingdom’s ongoing transformation and development. It addresses many of the shortcomings found in the previous law and stands out for its flexibility and freedom from excessive formal restrictions.

The new Saudi companies law also introduces new types of companies to meet the needs of the labor market, contributing to economic growth and the development of the commercial ecosystem, while encouraging companies to fulfill their social responsibility.

The new Saudi companies law consists of fifteen chapters, encompassing comprehensive provisions that regulate all types of companies, including newly introduced forms, as well as non-profit and professional companies.

Additionally, the law abolishes the partnership by participation (muhasasa) and defines the recognized types of companies as follows:

• General Partnership
• Limited Partnership
• Joint Stock Company
• Simplified Joint Stock Company
• Limited Liability Company

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What Are The Objectives of the New Companies Law Saudi Arabia?

The new companies law Saudi Arabia aims to strengthen the Kingdom’s business and investment environment through a set of strategic objectives designed to enhance growth and competitiveness. The Saudi companies law focuses on modernizing the commercial framework and aligning it with global standards.

Key objectives of the new companies law include:

• Enhancing corporate governance principles and promoting their implementation in accordance with international best practices to improve efficiency, transparency, and accountability.
• Simplifying regulatory procedures and requirements to stimulate the business environment and encourage investment, with a particular focus on empowering small and medium-sized enterprises (SMEs) and venture capital initiatives.
• Facilitating capital attraction and ensuring the availability of long-term, cost-effective financing sources, especially for startups and medium-sized companies.
• Clarifying key legal principles and provisions to reduce disputes among stakeholders and ensure legal certainty.
• Balancing the interests of all parties governed by the new companies law Saudi Arabia, while minimizing legal and financial risks associated with commercial activities.

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Top 10 Features of the New Saudi Companies Law

The New Saudi Companies Law introduces a set of reforms and advantages designed to enhance the business environment, increase flexibility, and promote long-term sustainability. The most notable features include:

1. Family Charter Integration allows the inclusion of a family charter within the company’s articles of association to regulate family ownership, governance, management, employment of relatives, and profit distribution.
2. Support for Long-Term Investment by removing restrictions across all stages of company formation, operation, and exit, as well as on company names and share trading.
3. Facilitating the Business Environment through improved regulations for company transformation and mergers, and permitting the division of a company into two or more entities.
4. Mandatory Appointment of Licensed Auditors requiring companies to appoint certified auditors within the Kingdom to ensure financial transparency and credibility, with exemptions for small and micro-enterprises except in specified cases.
5. Flexible Share Structuring allows shares to be divided or split into smaller nominal values, or merged into shares with higher nominal values.
6. Employee Share Incentives enabling companies to issue shares to employees to attract and retain talent, or grant them options to purchase shares after a specified period.
7. Enhanced Financing Opportunities for SMEs by allowing phased or annual profit distribution and permitting limited liability companies to issue debt instruments or tradable sukuk (Islamic bonds).
8. Digital Transformation of Procedures enabling electronic incorporation, virtual attendance at general assemblies, and voting on resolutions through modern digital platforms.
9. Alternative Dispute Resolution Options allowing companies to resolve disputes through arbitration or other alternative means.
10. Improved Company Liquidation Procedures aligning with the Bankruptcy Law to simplify dissolution processes and protect the rights of partners and creditors.

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Conclusion

The New Saudi Companies Law represents a major leap in modernizing the Kingdom’s business environment, ensuring transparency, flexibility. At Etqan Law Firm, we take pride in providing expert legal and business advisory services to help companies fully understand and implement the provisions of the New Saudi Companies Law, ensuring compliance, efficiency, and long-term success in the Saudi market.

The Etqan Al Mutamayza Law Firm is ready to provide the essential support you need. You can reach their team at the following mobile numbers: +96656113776, +966541110440, +966504315333.

Additionally, feel free to visit our branches located at:

• Jeddah: Al-Aziziyah District, Mohammed bin Abdulaziz Street (Tahlia)
• Riyadh: King Abdulaziz Street, across from the Kingdom Tower
• Dammam: Al-Ashri’a Street, Al-Badeea, Dammam 32415.

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