Service of converting an establishment into a simplified joint-stock company
The reasons that prompt the owner of the establishment to convert it into a simplified joint-stock company vary and are many, especially individuals who seek to expand and benefit from the legal and administrative advantages, so it is important to be aware of all the details related to the process of converting an establishment into a simplified joint-stock company, and the advantages of this conversion.
Suppose you need any legal or administrative advice regarding converting your establishment into a simplified joint-stock company in Saudi Arabia. In that case, Etmaam Company is pleased to provide support and all consultations related to this process, contact us through.
The simplified joint-stock company is one of the types of companies that have been recently introduced in the Kingdom of Saudi Arabia, which combines the advantages of a traditional joint-stock company and some of the advantages of limited liability companies, and has a limited number of shareholders, and it is easy to transfer ownership of its shares easily without any legal complications.
Simplified joint-stock companies enjoy many key advantages compared to other forms of companies that can be converted to in Saudi Arabia, the most prominent of which are:
Unlike sole proprietorships and traditional companies, simplified joint-stock companies allow raising financing through the issuance of tradable shares, which facilitates attracting new investors and provides broader financing opportunities.
Since simplified companies have a recognized entity in the Saudi corporate system, they enjoy a clear legal framework that regulates their management, shareholders' rights, and dissolution procedures, giving them higher credibility compared to informal entities.
As these companies maintain their legal structure without being bound by any strict requirements specific to companies listed on the stock exchange, which makes their management easier and more flexible, and contributes to creating a suitable operating environment for small and medium-sized companies.
Similar to traditional joint-stock companies, a simplified joint-stock company guarantees shareholders limited liability, as they are not liable for the company's debts and obligations except to the extent of their contributions, which protects their assets.
The new Companies Law allows sole proprietorships to convert into a simplified joint-stock company, but on condition that all requirements are met and the required capital is available.
This conversion allows entrepreneurs to expand and develop their businesses officially while maintaining control through majority ownership, which contributes to attracting new shareholders to inject capital to support expansion and growth plans.
A simplified joint-stock company is subject to most of the provisions applied to traditional joint-stock companies, while granting shareholders greater flexibility in determining the company's structure and operating mechanism through the articles of association.
1- Most of the provisions of joint-stock companies apply to it, but shareholders can establish a special system to organize its management and operation.
2- It does not require a general assembly like traditional joint-stock companies, but the shareholders themselves assume these powers, or they can delegate these powers to a specific person or entity according to the company's system.
3- Management is more flexible: The company can be managed by a chairman, director, or board of directors, as agreed upon in its articles of association, without being bound by strict administrative structures.
The conversion process requires following some basic steps, which are:
1 - The necessity of amending the company's articles of association.
2- Availability of the capital required by the simplified joint-stock company.
3 Preparing the papers and documents and then applying to the competent authorities.
Etmaam helps you facilitate the conversion process and complete the procedures with flexibility and without complications. Contact us and transfer your establishment with ease, complying with all laws and regulations.
Before starting the conversion process, it is recommended to follow the following steps to ensure a smooth transition and achieve maximum benefit:
1- Seek the help of a specialized company that has legal and administrative consultants to accurately understand all the requirements and legal procedures and avoid any potential obstacles.
2- Conduct a study and analysis of the economic feasibility to assess whether the conversion will achieve the required business goals.
3- Ensure the readiness of the organizational structure for the conversion decision to ensure the company's ability to comply with the new administrative and financial requirements.
Converting an establishment into a simplified joint-stock company is one of the strategic steps that support growth and expansion, but it requires a careful plan to ensure compliance with the laws and benefit from the available advantages. Therefore, it is recommended to rely on a specialized company with legal expertise to ensure that the conversion process is completed smoothly and successfully. We at Etmaam are happy to provide all services to help you. Contact us.
Yes, a sole proprietorship (a sole proprietorship) can convert to a simplified joint-stock company according to the new Saudi Companies Law. Still, it is recommended to seek the assistance of a legal advisor to review and ensure compliance with all procedures and regulations.
Yes, the founder of a simplified joint-stock company can own all the shares of the company, as the new Saudi Companies Law allows this type of company to be established by only one person.
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March 02, 2025
- BY Sultan Al-Qahtani