In Saudi Arabia, two partners can now establish a joint stock company

Saudi Council of Ministers approved the new law under which two partners can establish a joint stock company instead of five

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In a major boost for the small and medium enterprises sector, Saudi Arabia's Council of Ministers on Monday approved the new law of companies under which two partners can establish a joint stock company instead of a minimum five partners.

The weekly session of the Cabinet, chaired by Saudi Arabia King Salman bin Abdulaziz al-Saud at al-Yamama Palace here, took the landmark decision after examining a report from the Ministry of Commerce and Industry and a decision by the Shoura Council, the Saudi Press Agency reported.

According to the new company law, the minimum capital for setting up a joint stock company is SR500,000 ($133,000) instead of SR2 mln ($0.5 mln).

In a statement to SPA following the session, Saudi Minister of Culture and Information Adel al-Turaifi said the new law is based on the concept of a single person company so as to encourage traders to start their commercial activities by starting a company instead of an establishment.

To combat crimes and violations related with companies, the new law stipulates imprisonment up to five years and SR5 million ($1.3 mln) in fines.

At the outset of the session, King Salman welcomed leaders and heads of state to Saudi Arabia to attend the 4th Summit of Arab and South American states, which will be held in Riyadh on Tuesday and Wednesday.

This article first appeared in the Saudi Gazette on Nov. 10, 2015.

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