Restatement of AoAs
In our October Legal Dispatch, we highlighted the Ministry of Commerce’s (MoC) reminder regarding the January 19, 2025, deadline for companies to update their Articles of Association (AoA) in compliance with the 2023 Companies Law. This requirement applies specifically to limited liability companies (LLCs) and joint Stock companies (JSCs), as the other forms of business entities in KSA (e.g., branches) are not required to have AoAs. Companies must align their AoA with the standard format available on the Saudi Business Center (SBC) online portal.
The SBC AoA format introduces a more streamlined and accessible process, albeit with less drafting flexibility than the prior MoC template. However, the SBC format does allow companies to include custom provisions, provided they do not contradict the Companies Law or the primary AoA text. Failure to comply with the MoC deadline may result in fines, suspension of government services, and potential operational disruptions.
Notably, the Companies Law eliminates some restrictions, such as the mandatory statutory reserve, offering companies more flexibility in structuring their operations. Furthermore, businesses must ensure compliance before they will be permitted to make changes to their commercial registration (e.g., altering management, shareholding structure, or trade names). Early compliance ensures that companies will avoid last-minute pressures if such changes become critical closer to the deadline.
For more information or assistance with compliance, companies can access the SBC portal or contact our corporate compliance team for a free consultation.
Data Protection Updates
While the PDPL and its Implementing Regulation became fully enforceable on September 14, 2024, marking the end of the grace period for compliance, SDAIA has recently continued to provide detailed guidance to facilitate adherence. These guidelines, issued in August and September 2024, cover critical aspects, including appointment of Data Protection Officers (DPOs), development of Privacy Policies, Data Minimization Policies, Data Breach Incidents Procedural Guide, Data Destruction, Anonymization, and Pseudonymization Guidelines. SDAIA further issued awaited clarifications concerning the entities that will be required to register as controllers with the National Register of Controllers in KSA.
Amendments were also applied in August 2024 to the Regulation on Personal Data Transfers outside the Kingdom, with clarity provided on the procedures for evaluating whether a destination country or international organization offers an adequate level of data protection. The Authority further issued in September 2024 the anticipated Standard Contractual Clauses and Guidelines for Binding Common Rules governing personal data transfers outside of the Kingdom to countries or international organizations not recognized for providing an adequate level of Data protection.
On the Artificial Intelligence (AI) front, SDAIA introduced the AI Adoption Framework in September 2024. This comprehensive roadmap is designed to guide the responsible and systematic integration of AI across various sectors in the Kingdom. The framework emphasizes Saudi Arabia’s commitment to becoming a global leader in AI innovation and is now incorporated into SDAIA’s broader guidelines.
Labor Law Updates
Saudi Arabia has introduced amendments to its Labor Law, effective February 2025, as part of ongoing efforts to enhance and modernize the labor market and align with Vision 2030. While further details will be provided in the forthcoming Implementing Regulations, the changes introduce new definitions, strengthen workers’ protections, and clarify employers’ responsibilities. The updates include new provisions for resignation procedures, grievance mechanisms, leave entitlements, and working conditions. Specific changes also address specialized employment areas, such as outsourcing, which may further trigger amendments to the Table of Labor Law Penalties and Violations , ensuring broader coverage and consistency in labor practices.
Key updates mandate fixed-term contracts for non-Saudi workers, defaulting to one year if no term is specified, and set a 180-day cap on probation periods, removing the previous 90 days’ initial cap. Maternity leave has been extended to 12 weeks, and workers now receive additional leave benefits, including parental leave and bereavement leave for siblings. The law has introduced resignation procedures with written notice and clear employer response timelines. Employers must also now provide housing and transportation or allowances, implement training programs, and offer compensatory leave for overtime with employee consent. Lawful grounds for contract termination now include bankruptcy and notice periods for indefinite contracts are standardized at 30 days for employees and 60 days for employers. These reforms are designed to enhance worker rights, attract talent, and support sustainable development, with further clarifications anticipated in the upcoming amendments to the Implementing Regulations.
New Financial Regulations
The Capital Market Authority (CMA) has recently approved substantial regulatory changes to the sukuk and debt instruments market, including amendments to the Rules on the Offer of Securities and Continuing Obligations. The amendments streamline the prospectus requirements for public offerings and reduce the documentation required for debt instruments by over 50%. The public offering rules have been enhanced by introducing a separate section for such offerings which clarify the requirements for issuing sukuk and debt instruments, while ensuring investor protection through full disclosure of material information. Additionally, development funds, development banks, and sovereign funds are now permitted to issue debt instruments under exempt offerings, subject to specified conditions. The CMA has also removed the notification waiting period for private offerings, enabling issuers to initiate the offering process immediately. These reforms are designed to stimulate sukuk and debt issuances, broaden funding sources for businesses, and foster the growth of the national economy.
