The Saudi Cabinet approved a new companies law and real estate brokerage law to promote the commercial system in the Kingdom and drive growth in its startup ecosystem.
The new Law was signed off on Tuesday and will regulate all provisions related to companies, whether commercial, non-profit, or professional. It allows a new form of a company called a (Simplified Joint Stock Company) that meets the needs of entrepreneurship and venture capital growth.
It also allows the issuance of a family charter that regulates ownership in family businesses, governance, management, work policy, employment of family members, and cash profits to ensure the sustainability of these companies.
CEO of Razeen Capital, Mohammed Al Suwayed, said in a statement, “The new law will improve the financing and business dynamics in every sector in the economy; it should have a great positive impact on the economy for the next decades,”
Added, “I can’t point out a single impact because the impact is going to be happening in all of the sectors gradually,”
The new Law reduces the legal requirements and procedures for small and medium enterprises and simplifies the processes for establishing companies. Under this Law, many restrictions in the incorporation, practice, and exit phases and regulations on company names have been removed.
According to the Ministry of Investment, the changes will also improve the diversity and strength of the local market and raise the level of competition in the Saudi investment environment.
The Minister of Commerce Majid Al-Kassabi said, “The new corporate system came to achieve the hopes of family businesses, organize their business by concluding the family charter, encourage bold investment and address the challenges of entrepreneurs by approving the simplified joint-stock company,”
Real Estate Brokerage Law
Another law signed off the same day was the Real Estate Brokerage law, which aims to regulate the brokers’ business and provide innovative and high-quality services to beneficiaries.
Majid Al-Hogail, Minister of Municipal, Rural Affairs, and Housing, tweeted, “The Saudi Cabinet’s ratification of the real estate brokerage law will help ensure the reliability of real estate transactions through the Real estate General Authority,”
Added, “It will also help raise the level of services provided and preserve the rights of customers in the sector through standards and procedures for doing business.”
Al-Hogail explained that real estate brokerage services are limited to brokers licensed by the General Real Estate Authority and brokerage contracts.
He said that the real estate transactions must be submitted electronically, the commission and prepayment must be determined, and that violators will be subject to penalties under the Law.
Abdullah Al-Hammad, CEO of the Real Estate General Authority, thinks the Law is a “positive addition” he said, “This law complements the legislative system that the General Real Estate Authority is working on to regulate the real estate market in the Kingdom of Saudi Arabia,”
The chairman of the Capital Market Authority, Mohammad Elkuwaiz, said,” The new corporate system will play a pivotal role in supporting and strengthening the regulatory environment for commercial and economic entities.”
Elkuwaiz added, “The system aims to facilitate the procedures and regulatory requirements to stimulate the business environment and support investment.”