The old Companies Law no longer governs Saudi companies. The current Companies Law took effect in 2023 and replaced it, and companies that already existed were given a two-year transition period to bring their articles of association in line with the new rules, and it ended in early 2025. If you are reading the old law to answer a question about your company today, the answer now comes from the current law and its implementing regulations, and the authority that applies them is the Ministry of Commerce. Below is what changed for business owners, and what an older company should still check in its articles.
Does the old Companies Law still apply?
For the company’s day-to-day affairs, no. Since the current law took effect in 2023, it has governed how companies are formed and managed, how partners’ meetings work, how capital is changed, and how companies convert, merge, dissolve and liquidate. The old law is still worth knowing for one reason: many companies were founded under it, their articles were written in its language, and those articles often cite its provisions.
The new law did not ask existing companies to start again. It gave them a transition period to amend their articles so that they match the current rules, and that period has ended. A company whose articles still carry old wording, references to repealed provisions or arrangements the current law no longer allows should not assume the old text protects it. Where a clause conflicts with a mandatory rule of the current law, the law prevails, and the Ministry of Commerce applies the current rules whenever you file a change.
The Ministry of Commerce oversees companies and issued the implementing regulations for companies that are not listed. Listed joint stock companies are also subject to the rules of the Capital Market Authority.
The main changes a business owner will notice
The current law is broader and more flexible than the old one. It moves many decisions out of fixed statutory rules and into the company’s own documents, which gives partners more freedom and makes careful drafting matter more.
A new form: the simplified joint stock company
The law introduced the simplified joint stock company, a form that did not exist before. It is aimed at startups, growing businesses and companies that expect to bring in investors. It can be founded by one person or more, and its bylaws can set most of the rules on management and on the relationship between shareholders, with fewer fixed requirements than a traditional joint stock company. For a founder who plans to raise funding in rounds, it is often the first form worth discussing.
More freedom in the limited liability company
The limited liability company is still the most common form for private businesses, and it gained flexibility. The articles can now set more of the company’s own rules: whether it is run by one manager, several managers or a board of managers; how shares are transferred and whether partners have a right of first refusal; how a partner may exit; and how profits are distributed. More choice means the articles should be drafted deliberately, not copied from a template.
Partners’ agreements
The current law expressly recognizes agreements that partners or shareholders sign to organize their relationship alongside the articles. Such an agreement can cover what investors usually ask for, such as voting arrangements, limits on selling shares, and what happens when a partner wants to leave. It binds those who sign it, and it has to stay within the law.
Family charters
Family businesses can adopt a family charter that organizes the family’s ownership of the company: how the family takes part in governance and management, how family members are employed, how profits are distributed, how shares pass between generations, and how disputes are settled. For the many family-owned Saudi groups, this is one of the most practical additions.
Professional and non-profit companies in one law
Companies formed by licensed professionals, and non-profit companies, are now organized within the Companies Law itself instead of under separate rules, so one framework covers most company forms.
Reserves and profits
The old law required limited liability and joint stock companies to set aside a fixed statutory reserve from their profits. The current law dropped that mandatory reserve and leaves reserves to the articles and the partners’ decisions. How to treat a reserve already built up under the old law is a question to settle with your auditor and to reflect in the amended articles.
What an existing company should check in its articles today
If your company was founded under the old law, take out its articles of association, or its bylaws if it is a joint stock company, and check them against the current law clause by clause:
- References to the old law: any clause that cites the old law or its provisions should be rewritten to refer to the current Companies Law.
- Management: who manages the company, how managers or board members are appointed and removed, and what powers they hold, including signing, borrowing and opening bank accounts.
- Transfer of shares: whether partners have a right of first refusal, how a share is valued when it is sold, and what happens when a partner dies.
- Partners’ meetings: how meetings are called, the quorum and majorities for ordinary decisions and for amending the articles, and whether the articles allow meetings and voting by electronic means.
- Profits and reserves: whether the old statutory reserve wording is still there, and how profits are distributed.
- Exit and disputes: how a partner can leave and how disputes between partners are resolved, including any arbitration clause.
- Consistency: whether the data in the commercial registration matches the articles, from capital, partners and managers to activities.
If the company is family-owned or has investors from outside the founding group, also consider whether a family charter or a partners’ agreement would settle issues the articles do not cover.
How to amend the articles under the current law
- Review: compare the current articles with the law and its implementing regulations, and list every clause that needs to change.
- Draft: prepare the amended articles. Standard articles in the Ministry of Commerce e-services are a starting point; adjust them to how your company actually works.
- Decide: pass the amendment by a partners’ resolution, or by the extraordinary general assembly in a joint stock company, with the majority the law and the articles require.
- File: submit the amendment through the Ministry of Commerce e-services and follow the request until it is approved.
- Update the rest: once it is approved, give the amended articles to your bank and to any party that relies on them, and update authorized signatories if management has changed.
For drafting the clauses themselves, especially on share transfers, investor rights and family arrangements, work with a licensed lawyer. Innovant can help you organize the review and follow the filing with the Ministry of Commerce.
Common mistakes
- Relying on an old copy of the previous law found online, or assuming a company founded under it is untouched by the new one.
- Copying a template for the new articles without adapting management powers, exit rules and share transfers to the real partnership.
- Signing a partners’ agreement that contradicts the articles, so the two documents pull in different directions.
- Amending the articles but leaving the commercial registration data, bank mandates and signatories unchanged.
- Choosing the simplified joint stock company only because it is new, without checking whether it suits the business and its investors.
Frequently asked questions
Where can I find the text of the old Companies Law?
Are my company’s old articles still valid?
Do I have to convert my company into a simplified joint stock company?
Does the current law apply to foreign-owned companies?
What does the current law change for a family business?
Related reading: Companies Law Saudi Arabia: Practical Guide to MISA Licensing
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