Company Formation & Statutory Amendments

What do we offer in this area?

• Assessing the appropriate legal form for the business
• Preparing and reviewing articles of association and amendments
• Following up on formation and update procedures within the scope of the engagement

The scope of work and required documents are determined after reviewing the matter and agreeing on the engagement.

Choosing the legal form before incorporating a company

Forming a company begins with practical questions: who the partners are, what limits of liability they are prepared to accept, and whether investors are expected to join later. The new Companies Law, in force since 26/6/1444H, sets out the available forms, including general partnership, limited partnership, joint-stock company, simplified joint-stock company, and limited liability company. The Law allows a limited liability company or a simplified joint-stock company to be formed by a single person.

• Limited liability company: based on shares and suits many small and medium-sized businesses
• Simplified joint-stock company: based on shares and offers flexibility in bringing in investors
• Joint-stock company: for ventures that require a broader administrative and capital structure
• General and simple limited partnerships: some or all partners bear personal liability in them

Drafting the articles of association and partner agreements

The articles of association are not merely a form to be filled in. They determine the capital and shares, the powers of the manager or board of managers, how decisions are made and their quorum, restrictions on transferring shares, and the mechanism for a partner’s exit. For family businesses, the law allows entering into a family charter governing ownership, management, and dispute resolution. These provisions are reviewed together with any necessary contracts and agreements between partners so that no document conflicts with another.

Amending the articles of association and updating the commercial register

A company needs to amend its articles of association when a partner joins or leaves, when capital is increased or reduced, when the manager, activity, or trade name changes, or when the legal form is converted. The amendment is issued by decision of the competent body within the company according to the required quorum, then registered with the Ministry of Commerce, and the commercial registration data is updated. Since the new Commercial Register Law took effect in April 2025, the register no longer has an expiry date, and what is now required is an annual confirmation of its data.

Documents usually prepared for incorporation or amendment include:

• IDs of the partners or the partners’ corporate records
• The current articles of incorporation and their latest amendments
• The partners' or the assembly's resolution containing the amendment
• Particulars of the manager or board members and the limits of their authority

Frequently asked questions

What is the difference between a limited liability company and a simplified joint-stock company?

Both limit the liability of the partner or shareholder to the extent of his share or shares, and either may be formed by one or more persons. The first is based on shares (hisas) and generally suits closely held companies, while the simplified joint-stock company is based on shares (as'hum) and offers greater flexibility in structuring ownership and admitting investors. The form is chosen according to the company's plan and its sources of financing.

When Is Amending the Articles of Association Required?

The amendment is required whenever material data changes, such as the partners, shares, capital, management, activity, or legal form. It is issued by decision of the partners or the competent assembly according to the majority stipulated in the Companies Law and the articles of association, then registered with the Ministry of Commerce for its legal effect to be complete and for the updated data to appear in the commercial register.

Can a Limited Liability Company Be Formed by a Single Person?

Yes, the new Companies Law allows a limited liability company to be formed by one or more persons, as well as a simplified joint stock company. Nevertheless, complete separation between the company's assets and the owner's personal assets must be observed in accounts and dealings, because mixing them may expose the owner to personal liability in the cases specified by the law.