As part of Saudi Arabia’s Vision 2030 and its broader efforts to enhance the business environment, significant reforms have been introduced to the Saudi Companies Law. These updates aim to modernize the legal framework for companies, attract both local and international investors, and ensure greater operational flexibility.
For businesses and investors alike, these changes present both opportunities and obligations—making early legal and strategic preparation essential.
The law, which came into full effect following its issuance in 2022, seeks to position Saudi companies more competitively at both regional and global levels.
These reforms serve as a cornerstone for improving corporate governance, simplifying company formation, and enhancing transparency for regulators and investors.
Below are the most notable reforms reflected in the regulatory texts and executive bylaws (up to 2025), and what they mean for businesses:
A new legal structure—the Simplified Joint Stock Company—has been created to provide more flexibility, streamlined management, and an ideal framework for startups and SMEs.
Impact on companies: Faster market entry and simplified governance requirements.
Legal recommendation: Review your corporate structure and select the most suitable legal form before incorporation or restructuring.
Companies are now required to adopt electronic systems for documentation, corporate recordkeeping, and reporting through official digital platforms.
Impact: Enhanced monitoring of corporate activities; non-compliance may lead to penalties or suspension of corporate services.
Recommendation: Implement a digital transformation plan, update internal policies, and modernize annual reporting procedures.
The updated law allows companies to determine profit and loss distribution mechanisms within their Articles of Association according to partners’ agreements—without strict adherence to conventional ratios.
Opportunity: Restructuring family businesses and multi-shareholder companies for greater flexibility.
Recommended action: Review and update your Articles of Association and partnership agreements to benefit from this flexibility.
As of 3 April 2025, companies must disclose their Ultimate Beneficial Owners and update this information regularly.
Importance: Higher transparency and enhanced credibility, which may affect financing opportunities and eligibility for government contracts.
Immediate step: Identify UBOs accurately and establish a system for periodic submission in line with regulatory deadlines.
On 18 January 2025, the grace period granted to existing companies to update their Articles of Association in compliance with the new law officially ended.
Important note: Companies that fail to update may face legal complications in future transactions or corporate procedures.
Urgent recommendation: If not already done, immediately review and file the required amendments.
To ensure compliance and avoid legal risks, companies should:
Conduct a comprehensive legal audit of their Articles of Association, partner agreements, and internal policies.
Develop a strategic plan for incorporation or restructuring based on the most suitable legal form, digital requirements, and governance needs.
Maintain continuous updates to internal systems and strictly follow the Kingdom’s executive regulations.
Consult a specialized Saudi law firm for complete legal support—from incorporation to ongoing compliance.
At AL Zamil & AL Hudaithi Law Firm, we provide tailored legal services to help clients navigate these reforms efficiently and confidently, including:
Reviewing Articles of Association and evaluating the potential transition to an SJSC structure.
Supporting digital transformation and ensuring proper registration across government platforms.
Drafting and updating partner agreements to align with new profit-distribution flexibility.
Preparing UBO files and submitting required disclosures within regulatory timelines.
Monitoring ongoing legislative changes and issuing periodic compliance updates to clients.
The recent reforms to the Saudi Companies Law are not superficial updates, but transformative changes reshaping the corporate legal landscape in the Kingdom.
They create broader flexibility, stronger governance, and safer investment environments.
Early action, strategic legal planning, and partnering with a qualified law firm—such as AL Zamil & AL Hudaithi Law Firm—are essential for building a compliant, resilient, and growth-ready business.