The Kingdom of Saudi Arabia’s public companies sector is currently undergoing a significant phase of transformation. It aimed at improving oversight and transparency.
This is due to the government’s decisive decisions. Thus, to regulate the process of establishing public companies and designate the approval entities.
These strategic actions help to fortify the investment climate in the Kingdom of Saudi Arabia. As well as draw in more domestic and foreign capital by improving transparency and governance in the public company sector.
In this piece, we examine the approved approval and rejection methods. It emphasises the new requirements for forming public corporations in the Kingdom of Saudi Arabia.
New Requirements for Forming Publicly-Owned Companies
As a way of ensuring that these enterprises are under national development plans and delivering the maximum feasible economic return, the Saudi Council of Ministers recently issued a new ruling. It mandates public entities seeking to establish for-profit companies to first secure approval from the Public Investment Fund.
After receiving the required information, the Fund has ninety days to reply to requests.
Procedures in Case the Application is Denied:
Should the public entity choose to move forward with the project after the Fund denies the application, it must provide both the application and the Fund’s answer to the Ministry of Finance.
The Ministry will work with the public institution to review the application and make a decision within 90 days of receiving it.
Heading to the High Office:
Cabinet Resolution No. 804 states that if the Ministry and the public entity are unable to agree, the entity may bring up the issue with the High Office, providing the Ministry and the Fund’s views on the request along with an explanation of the need and supporting documentation.
Limitation Requirement of Current Companies:
The ruling mandates that public entities list the businesses they created, co-founded or owned stock within 60 days of the ruling’s effective date.
This requirement does not impact the companies’ ability to continue operating. Until the decision comes regarding the transfer of their ownership to the fund or another entity.
Businesses Left off the Limitation Requirement:
The decision exempts several institutions from the requirement of limitations. They include the General Authority for Endowments, the General Authority for the Guardianship of the Funds of Minors, the Central Bank of Saudi Arabia, the National Centre for Privatisation, the National Development Fund and its affiliated development funds and banks, and other similar organisations.
Read more about Foreign Investment in Saudi Arabia: Opportunities and Regulations
