New Saudi Professional Companies Law

New Saudi Professional Companies Law


Saudi Arabia is to adopt a new Professional Companies Law by March 2020

The Saudi Council of Ministers recently approved the new professional Companies Law. The Law will come into force after 180 days following the date of publication in the Official Gazette. The new Law has repealed the Professional Companies Law of 1991.

The Minister of Commerce and Investment along with the Competent Authorities, will issue implementing regulations of the Law within 180 days from the date of publication of the Law in the Gazette. The Law and its implementing regulations will become effective simultaneously by March 2020.

Professional companies are independent companies comprising of one or more person(s) duly licensed to carry on one or more professions, alone or with other non-professionals. The Law does not allow a partner in one professional company to take part in another company in the same line of business.

Professional Companies will not be governed by the rules of Saudi Company Law, unless  there is no provision in the Professional Companies Law to govern the matter, in which case the Saudi Company Law should apply.

According to the new law, non-Saudi professional companies may enter into partnership with Saudi professional companies.

The implementing regulations will fix terms regarding the management of professional companies to ensure independence of shareholders or partners.

One further significant development in the new law is that a shareholder in a professional company might be a licensed professional or non-professional person.

Unlike the old law where the professional companies were Joint stocks only and not allowed to take any other form, under the new law, professional company shall take one of the following forms:

  • Unlimited liability Company;
  • Joint stock company;
  • Limited partnership; or
  • Limited liability company.

Upon implementation of the new law, partners in professional companies will be free to change the structure of their limited liability company into unlimited liability and vice versa.

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