The Ministry of Commerce and Investment announced the regulatory guidelines for unlisted joint-stock companies in implementation of the Companies Law issued by Royal Decree No. (M/3) dated January 28,1437 AH, which took effect on the 25th of Rajab of last year, corresponding to May 2, 2016. The Companies Law delegates the regulation of a number of matters to regulations issued by decision of the Minister, which aim to regulate a number of important aspects related to the operations of unlisted joint-stock companies, namely: remuneration of board members; the convening of general meetings of shareholders and their participation therein via modern technological means; the company’s purchase, sale, and pledging of its shares; the pledging of company shares, the issuance and conversion of preferred shares, the sale of shares at public auction, the distribution of profits to company shareholders, the issuance and sale of preemptive rights resulting from a capital increase, and procedures for proxy representation at general and special meetings.
These regulations were prepared in coordination with the Capital Market Authority after studying relevant international best practices and standards, and their preparation also took into account feedback from stakeholders, interested parties, and experts, in addition to holding several workshops to gather comments on these regulations.
The issuance of these regulations complements the joint cooperation and coordination between the Ministry of Commerce and Investment and the Capital Market Authority, with the aim of ensuring the application of the Companies Law in a manner that positively impacts the entities subject to it and achieves the objectives intended by the law.
