TheMinistryofCommerce(“MC»)andtheCapitalMarketAuthority(“CMA»)clarifiedtoday,
11/06/1444Hcorrespondingto04/01/2023GHthemechanismofimplementingtheNewCompanies
Law,whichcomesincontinuationofthejointeffortsbetweentheMCandtheCMAtoachieve
integrationandharmonyinimplementingtheLawtosupportinrealizingitsgoals.
TheMCandCMAstatedthatpursuanttoItem(Third)ofRoyalDecreeNo.(M/132),dated1/12/1443AH,
issuedapprovingtheLaw,whichstipulates:“Existingcompanieswhenthelaw-referredtoinItem
(First)ofthisDecree-iseffectivemustamendtheirpositionsinaccordancewiththeprovisionsofthe
Lawinaperiodnotexceeding(two)years,startingfromitseffectivedate.Bywayofexception,the
MinistryofCommerceandtheCapitalMarketAuthority-eachinaccordancewithitscompetencies-
shalldeterminetheprovisionstowhichthosecompaniesshallbesubjectduringthatperiod”;and
sincetheLawwaspublishedinUmmAl-QuraGazetteon23/12/1443Hcorrespondingto22/7/2022G
andwillbeeffectiveon26/6/1444Hcorrespondingto19/1/2023G,thetwo-yeargraceperioddoes
notincludenewcompaniesincorporatedaftertheLawcomesintoeffectastheywillbesubjecttoall
provisionsoftheLawfromitseffectivedate.Thegraceperioddoesnotincludetheprovisionsthat
havecontinuedfromtheCompaniesLawissuedbyRoyalDecreeNo.(M/3),dated28/1/1437AH,nor
doesitincludetheprovisionsstipulatedintheLawoncrimes,offencesandthepenaltiessetbythe
Lawuponcommittingthesame,whichshallbeeffectiveattheeffectivedateoftheLaw.Additionally,
provisionsthatintroducedproceduralrequirementsonthecompanyoritsadministrativebodyshall
applyattheLaw'seffectivedate.
ExamplesoftheprovisionsforwhichcompaniesaregrantedagraceperiodincludeArticles(36),(52),
(61),and(158)oftheLaw,notingthatcompaniesmustcomplywiththeprovisionofParagraph(1)
ofArticle(68)oftheLawwhenthetermofthecurrentBoardofDirectorsendsandanewBoardis
elected,andbeforetheexpiryofthetwo-yeargraceperiodaftertheLaw’seffectivedate,whichever