Saudi commerce ministry, CMA monitor liquidation of loss-making firms: report

Saudi Arabia’s Ministry of Commerce & Investment (MCI) and the Capital Market Authority (CMA) have formed a joint team to monitor liquidation of firms with losses exceeding 50 percent of capital, Al-Eqtisadiah newspaper reported on Wednesday, citing unnamed sources close to the matter.

Saudi-listed firms will be monitored by the Kingdom’s market regulator, while other companies will be overseen by MCI.

Meanwhile, commercial courts will be urged by the justice ministry to issue final decisions on pending liquidation lawsuits for listed companies.

The MCI and CMA announced on Tuesday conditions for liquidating listed and unlisted joint stock firms.

Under the Saudi corporate law, loss-making companies are required to immediately notify the chairman and the board of directors if losses stand at 50 percent of capital, Argaam earlier reported.

The board must invite shareholders to attend an extraordinary general assembly meeting within 15 days of notification.

The assembly should be held no later than 45 days, and shareholders must then decide to increase the company’s capital, reduce it, or liquidate before the date defined in the articles of incorporation.

However, firms may be dissolved if the company’s extraordinary general assembly does not hold its meeting during the defined period of time. The firm could also be dissolved if shareholders fail to reach a decision, or if the capital increase is not fully subscribed within 90 days of the meeting date.