1- The words and phrases contained in this Regulation shall have the meanings specified for each of them in Article (1) of the Companies Law, issued by Royal Decree No. (M/132) dated 1/12/1443 AH.

2- The following words and phrases - wherever they appear in this Regulation - shall have the meanings specified for each of them, unless the context requires otherwise:

Regulation: The Implementing Regulation of the Law.

Registered Shareholder: The shareholder registered in the shareholders' register at the end of the day of the extraordinary general assembly meeting to approve the increase of the company's capital and the issuance of the new shares representing it, or at the end of the day of the profit entitlement specified by the general assembly or the board of directors as applicable.

Cumulative Voting: A voting method for selecting members of the board of directors that grants a shareholder who owns shares with voting rights a voting power equal to the number of those shares, allowing them to vote for one candidate or distribute their votes among the candidates of their choice without repeating those votes.

Purchased Shares: The shares purchased by the company under Article (114) of the Law.

Treasury Shares: The purchased shares that are held by the company.

Employee Shares: Treasury shares allocated by the company for its employees.

Preferred Shares: Shares issued by the company that grant their holders preferential rights over ordinary shares, and do not give those shares' holders the right to vote in the general assemblies of shareholders.

Redeemable Shares: Shares issued by the company that are redeemable at the company's option and according to the terms and conditions of their redemption.

Retained Earnings: The cumulative balance remaining as of the financial statements date of net profit or loss for previous years and the current year, after being adjusted for any profit distributions or allocations to reserves, or any other adjustments resulting from the application of the requirements of the approved accounting standards.

Freelance Profession: A profession through which a person provides services to others, based on expertise, qualification, talent, or skill, and after obtaining the necessary license from the relevant authority overseeing and regulating the freelance profession.

Remunerations: What a board member receives in terms of amounts, allowances, and a percentage of net profits and similar, as well as periodic or annual bonuses linked to performance or short- or long-term incentive plans, and any other in-kind benefits, excluding reasonable actual expenses incurred by the company for the purpose of enabling board members to perform their duties.

Certified Appraiser: A natural or legal person licensed in accordance with the Certified Appraisers Law, issued by Royal Decree No. (M/43) dated 9/7/1433 AH.

1. The verification of the identity of the founders or partners when establishing the company or amending its articles of incorporation shall be conducted through the data notarized at the National Information Center, or through the Commercial Register, or through the competent authority for notarization in cases specified by the Ministry in coordination with the Ministry of Justice.

2. To amend the bylaws of a joint-stock company or a simplified joint-stock company, it is required to submit to the Commercial Register a decision from the extraordinary general assembly or the shareholders approving the amendment along with the necessary documents and requirements.

Subject to the provisions regarding the evaluation of in-kind contributions as stipulated in the law, the period from the issuance of the report by the accredited appraiser estimating the fair value of the in-kind contributions made to the capital of the joint-stock company, the simplified joint-stock company, and the limited liability company, to the issuance of the corresponding shares or stocks, shall not exceed (six) months.
 

In implementation of the ruling of paragraph (2) of Article (Eleven) of the Law, the quorum for amending the agreement of the partners or shareholders or the family charter, if it is part of the company's articles of incorporation or its bylaws, shall be in accordance with the procedures established for amending the articles of incorporation or bylaws of the company according to the type of company.

The company's manager or chairman of the board must deposit the company's financial statements and the auditor's report - if available - with the Saudi Business Center through the electronic deposit program for financial statements.

With due regard to the periods stipulated in the relevant laws and regulations, and what is stated in the Code of Conduct and Ethics for the Accounting Profession adopted in the Kingdom, the partners, general assembly, or shareholders shall appoint an auditor (or more) while considering the following:

• ‌A. The term of service for an individual auditor shall not exceed (ten) consecutive financial years.

• ‌B. The term of service for an auditing firm shall not exceed (ten) consecutive financial years, and after this period, it may be reappointed based on a recommendation from the audit committee, if available, or the existence of other offers to audit the company's accounts, provided that the total term of service for the auditing firm does not exceed (twenty) consecutive financial years, and the term of service for the partner supervising the audit shall not exceed (ten) consecutive financial years.

• ‌C. An individual who has ceased auditing for a period of less than (two) financial years may be reappointed for the remaining duration of the maximum periods stipulated in paragraphs (A) and (B) of this article.

• ‌D. An individual who has exhausted the maximum periods stipulated in paragraphs (A), (B), and (C) of this article may be reappointed after a period of (two) financial years from the date of the termination of their service.

1. A company is classified as micro or small during a financial year according to paragraph (1) of Article (Nineteen) of the Law when two of the following conditions are met:

• ‌A. Its total annual revenues do not exceed (ten) million Saudi Riyals.

• ‌B. Its total assets do not exceed (ten) million Saudi Riyals.

• ‌C. The number of its employees does not exceed (forty-nine) employees.

2. The company's manager or chairman of the board must attach a statement when submitting the company's financial statements, indicating that the requirement for appointing an auditor does not apply to the company, and that no partner or shareholder, or more, representing the stipulated percentage in paragraph (3) of Article (Nineteen) of the Law has submitted a request for the appointment of an auditor.