• Family businesses in Saudi Arabia account for 63% of businesses in the private sector.
5, June 2023: The Pearl Initiative, a business-led non-profit organisation focused on promoting corporate accountability in the Gulf region’s private sector, recently collaborated with Al Tamimi & Company to hold a virtual session to unpack the New Companies Law in Saudi Arabia and its impact on family firms. The session convened family business leaders from across the kingdom to learn more about how the new Companies Law supports family-owned businesses' long-term sustainability and stability.
The webinar, led by Omar AlHumaid, Senior Counsel at Al Tamimi & Company, outlined the changes introduced by the new law that have implications for family firms. The new Companies Law allows for the introduction of a family charter in the articles of association to regulate ownership, governance, management, work policy, employment, and dividend distribution in family-owned companies.
During the session, Mohamed Al Moosa, of the Pearl Initiative said: 'Family businesses in Saudi Arabia play a significant role in the economy and account for 63% of businesses in the private sector. The new Companies Law provides a legal framework that enables robust governance which is essential for family businesses to operate effectively and sustainably.'
The new Companies Law, which came into force last year, brings significant changes for family businesses in Saudi Arabia. The law applies to all business entities regardless of the number of shareholders or type of business. As a result, family firms have a legal framework to formalise their governance structures, establish boards of directors, adhere to corporate reporting and disclose standards to bring the country into line with international best practices. This new law marks a key milestone and a monumental shift in the ability of family firms to navigate issues of ownership, governance and succession through legal frameworks designed to enhance their sustainability, longevity, competitiveness, and agility.
The session is part of the Pearl Initiative's mission to enhance corporate governance, transparency, and accountability across the private sector in the Gulf region, with a dedicated programme focusing on family firms, contributing to the overall growth and prosperity of the region.
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