The Saudi Minister of Commerce has recently issued a circular amending certain provisions of the Companies’ Law.
The key changes are highlighted below:
- The time frame within which the General Assembly of the Partners (in a limited Liability Company) must hold its annual meeting has ben extended to twelve (12) months following the end of the fiscal year (Article 167 paragraph 2);
- The time frame to provide the Ministry of Commerce with a copy of the auditor’s report, the company’s financial statements, the report concerning the activities of the company, its financial position and the suggestions regarding the distribution of the profits, has been extended to twelve (12) months from the end of the fiscal year (Article 175);
The extension of time provided for in items (1) and (2) above shall expire on December 31st, 2020.
- As an exception to the provisions of Article 181 of the Companies’ Law, the time frame within which the manager/s of a Limited liability Company must convene the partners to a meeting shall be extended to become one hundred and eighty (180) days from the date on which they learned that the losses reached half of the company’s capital, for a period of two (2) years from 1/8/1441 H corresponding to March 26th, 2020.
- The provisions of paragraph 3 of Article 181 of the Companies’ Law shall be suspended for a period of two (2) years from 1/8/1441 H corresponding to March 26th, 2020 and limited liability companies whose losses reach half of the company’s capital must disclose the status of the losses continuously and in accordance with the following procedures:
– The manager/s of the company must, forthwith upon learning that the losses of the company have reached half of its capital, publicize this fact on the Ministry’s website, indicating the amount of the losses, the percentage they represent of the company’s capital and the main reasons which led to this accumulation of losses;
– The manager/s of the company must submit to the Ministry, on a quarterly basis, an attestation showing the evolution of the losses, within fifteen days from the end of each quarter and request that an announcement be published on the Ministry’s website in this regard;
– The manager/s of the company forthwith upon learning that the company’s losses have fallen below half of its capital must petition the Ministry to publish an announcement in this regard on the Ministry’s website, indicating the steps taken by the company to remedy the situation.
- The provisions of paragraphs (a), (b), and (c) above shall remain in force until 30/7/1443 H corresponding to March 4th, 2022.
- By way of exception to the provisions of Article 166 of the Companies’ Law, limited liability companies are allowed to re-appoint their auditor whose tenure has lasted five (5) consecutive years, for no more than two (2) years provided that the total tenure does not exceed seven (7) consecutive years for the auditing firm and five (5) years for the partner supervising the audit. This exception shall expire two years after 1/8/1441 H corresponding to March 26th, 2020.
