Have you ever considered how converting your company into a closed joint-stock company can enhance your chances of success? Converting companies into closed joint-stock companies is a strategic step that can provide many advantages such as improving capital and administrative independence. This transformation may be the best option if you are a business owner looking to grow and increase investment opportunities while maintaining privacy. In this article, I will discuss in detail the advantages and conditions for converting a company into a closed joint-stock company, in addition to the potential challenges and how to overcome them to ensure the success of this step, keep reading with me.
It is one of the most important financial companies that consists of a group of shareholders, whose capital is divided into shares of equal value and tradable, and subscription and trading in its shares is limited to its founders or a limited number of shareholders, and thanks to privacy and flexibility, closed joint-stock companies are the best choice for an aspiring entrepreneur.
1- Trading of its shares is limited to a limited number of shareholders or founders and is not offered to the general public.
2- It has its entity and legal personality independent of its shareholders, which gives it independence and flexibility in managing bits business.
3- Shareholders' liability is limited to their share of the capital, which reduces personal financial risks.
4- Ease of trading and purchasing shares, provided that the restrictions imposed on trading are adhered to.
5- The company's shares are not offered for public subscription, which maintains the confidentiality of the company's information.
6- Flexibility and speed in making decisions due to the limited number of shareholders.
The closed joint stock company is characterized by many advantages that make it the ideal choice for anyone who wants to convert their company into a joint stock company and attract investments while maintaining privacy and administrative flexibility. The most prominent of these advantages are:
Capital is the basis for establishing and managing the company, not people, which gives the company stability and independence.
The General Assembly elects the members of the Board of Directors, and 50% of shareholders must attend the first invitation, and a specific percentage is not required in the second invitation.
Any shareholder has the right to participate in the election of the members of the Board of Directors, regardless of the percentage of his shares in the capital.
The company can convert to a public joint-stock company after two years of its establishment, provided that all the requirements and conditions that must be met in a public joint-stock company are met.
The company's shares are characterized by their ease of trading or selling them easily without complications, which distinguishes them from limited liability companies.
Not touching the company's assets.
If one of the partners wants to sell his share, the company's assets are not sold to pay his share, which maintains the stability and continuity of the company.
The closed joint-stock company is characterized by privacy and stability that work to attract investors and customers and increase their confidence.
This is because the company's system contributes greatly to increasing capital and raising the social status of the company, as it depends on money, not individuals.
If you are looking to improve your company's administrative and financial performance, transforming it into a closed joint-stock company can be the ideal solution, and the most prominent of these is:
1- Organizing the company's financial and administrative structure by dividing the capital into equal shares.
2- Providing transparency and credibility that enhances investor confidence and attracts them.
3- The ability to expand, grow, and contribute to financing large projects.
4- The company's reliance on capital primarily, guarantees its independence and continuity even in the event of the withdrawal of one of the partners.
5- Its ability to attract qualified employees and high competencies, because the company enjoys a large and high social and economic status.
Some conditions must be met to complete the process of converting a company into a closed joint stock company smoothly without committing any violations. The most prominent of these conditions are:
1- The joint committee consisting of the Ministry of Economy, the Securities and Commodities Authority, and the competent authority must approve the conversion request.
2- The approval of the general assembly and shareholders according to the type of company and its administrative structure.
3- Amending the company's articles of association to comply with the requirements and standards of the closed joint stock company.
4- Conducting an accurate assessment of the capital and assets to ensure that they comply with the minimum capital required for closed joint stock companies.
5- The conversion request must be submitted after a specific period has passed since the company was established and registered in the commercial register.
6- The capital must comply with the minimum required by the Capital Market Authority and legal authorities.
7- After approving the conversion request, the company's commercial register must be updated and registered as a closed joint stock company.
8- The necessity of complying with local regulations and laws related to closed joint stock companies.
Converting a company into a closed joint stock company is an important strategic process, but it may face many challenges, the most prominent of which are:
Legal challenges
Companies face legal challenges during the conversion process, such as:
1- Difficulty in complying with complex regulations and laws.
2- Delay in obtaining the necessary approvals from government agencies such as the Ministry of Commerce and the Capital Market Authority.
3- Amending and preparing the articles of association may take time and effort to comply with the requirements of joint stock companies.
Financial challenges
1- There is a shortage in the capital required for the conversion to a joint stock company, which may constitute a financial burden on the company.
2- Conducting an accurate evaluation of the company's assets may lead to disputes between shareholders, especially regarding the fair market value.
Administrative and organizational challenges
1- The conversion process may require restructuring the management, including forming and electing a new board of directors, which may cause complications.
2- Ensuring the compatibility of the rights of existing shareholders may cause disputes between the parties.
Time Challenges
The process of converting a company into a joint-stock company may take a long time to meet all the conditions for converting the company into a closed joint-stock company.
High Costs
This process may require high costs related to legal procedures fees, financial consultations, and management restructuring.
Converting a company into a joint-stock company is a strategic step that involves great opportunities for growth and expansion, but it may face many challenges that require careful planning and the assistance of legal and financial experts to ensure the success of the process. Therefore, "Etmam" Company provides you with a specialized team of the highest quality legal and financial experts, to ensure that the process of converting your company runs smoothly without facing any problems. Contact us. 0554799222
The amount of the minimum capital required to convert a company into a closed joint-stock company depends on the local laws of the Kingdom, and these requirements may differ based on the nature of the company's activity and the decisions of the regulatory authority for this process.
Of course, a closed joint stock company can convert to a public joint stock company, provided that all requirements of the Capital Market Authority are met and all conditions are met.
If you are thinking of converting your company, our team at "Etmaam" is ready to support you every step of the way. Do not hesitate to contact us today! 0554799222
December 15, 2024
- بواسطة Sultan Al-Qahtani
