The Authority for Cities and Special Economic Zones issued the rules for companies in special economic zones, which apply to companies established in the zone, Saudi companies founded in another region of the Kingdom, and branches of Gulf or foreign companies registered in the same economic zone.

Profit distribution and review 40 days before the general assembly meeting

The rules included regulations for establishing companies, most notably that companies must ensure that each company has a trade name in Arabic or another language. The name may be derived from its purpose, a distinctive name, or the name of one or more current or former partners, or a combination thereof, provided it does not violate trade name regulations. Written consent from the partner or their heirs if deceased must be obtained if the trade name includes any of the names of former partners in the company. The trade name may also be amended in accordance with regulatory procedures, and such amendment shall not affect the company's rights or obligations prior to the amendment.

The rules stipulate that the company's incorporation contract or its bylaws must include a set of essential data, including the names and details of the partners, the company name, its head office, its purpose, the capital and its distribution among partners, the partners' undertaking to pay the value of shares, the company's term if any, its management mechanism, provisions for transfer of shares, means of sending notices to partners and their resolutions, how profits and losses are distributed, the beginning and end of the fiscal year, cases of dissolution of the company, in addition to any other data or terms agreed upon by the partners, provided they do not conflict with the provisions of the rules.

The rules require the company manager or board of directors to prepare annual financial statements and a report on the company's activity and financial position, along with recommendations on profit distribution, and submit them for review by the auditor at least 40 days before the date of the annual general meeting. They also require providing partners with the financial statements, activity report, and auditor's report at least 21 days before the general meeting, and depositing these documents with the Authority in accordance with legally approved procedures and means. The founders must undertake to comply with all incorporation requirements, and submit a report from an accredited valuer if in-kind shares are owned by more than one person, determining their fair value, along with a declaration from the remaining founders approving that value, and ensuring that the data provided in the registration application does not conflict with data previously submitted to the competent authorities for licensing purposes.

It is also permissible to amend the company's capital or its bylaws, including increasing or decreasing its capital with the approval of one or more partners representing at least three-quarters of the capital. Upon approval of a capital increase through the issuance of new shares, partners have priority in subscribing to the shares issued for cash consideration in proportion to their ownership in the company's capital. The capital may not be increased by raising the nominal value of partners' shares or suspending preemptive rights except by unanimous consent of the partners. Except for criminal acts, the incorporation contract may provide for the settlement of disputes or conflicts of any nature that may arise between the partners or between the company and its managers or board of directors through arbitration or other alternative dispute resolution methods.

It is not permissible to increase capital by raising the nominal value of shares.

Regarding liquidation, if the company is dissolved, it enters into liquidation in accordance with the provisions of the rules. The partners or the general assembly must take liquidation procedures. The company retains its legal personality to the extent necessary for liquidation. If the company is dissolved for any of the reasons stipulated in the rules, the partners, the company manager, the board of directors, or the board of managers must prepare a statement indicating that they have examined the company's status, including confirmation that the company's assets are sufficient to pay its debts by the end of the proposed liquidation period, and that the company is not insolvent according to the Bankruptcy Law, unless such statement was prepared before the dissolution and provided that no more than 30 days have elapsed since its preparation.

If it appears that the assets are insufficient to pay its debts or the company is insolvent, it must apply to the competent judicial authority to initiate any liquidation procedures under the Bankruptcy Law. If the company is dissolved in violation of this provision, the partners, the company manager, the board of directors, or the board of managers shall be jointly liable for any remaining debt.

The rules also stipulate that in the event the company does not carry out its activity, the partners or the general assembly may unanimously decide to dissolve the company if it has not engaged in any activity or performed any action. The decision is submitted to the Authority and must include: a declaration from the company manager or board of directors that it has not engaged in any activity or performed any action, that it has no assets or properties, that it has no debts or obligations (due, deferred, or disputed) to third parties, and that no taxes or fees are owed to the state or the relevant competent authority; and a joint undertaking from all partners to pay any debts or obligations to third parties that may arise from their personal funds. After this undertaking, the liquidation period ends, the company is financially closed, and its final account is settled. This also serves as a request to strike the company's registration from the companies register.

It is prohibited to announce obtaining a license before completing procedures.

It also stipulates a set of prohibited acts that are considered violations, most notably: recording incorrect data or information in the company's records, financial statements, or reports; providing misleading information to partners or the general assembly; misusing the company's funds, assets, or authority for personal benefit or harming the company's or creditors' interests; or exploiting the company's investment opportunities for personal or unauthorized third-party benefit. The rules also prohibit the auditor from refraining to report violations discovered during their work, as well as any person obtaining benefits, guarantees, or promises in exchange for influencing or refraining from voting in a manner that harms the company's interests.

The rules also prohibit announcing or implying that a company has obtained registration or a license before completing its registration procedures; disclosing or exploiting company secrets; establishing fictitious companies or using names of persons contrary to fact; distributing profits or returns in violation of regulations or based on incorrect financial statements; failing to disclose material losses or making decisions that harm the rights of partners or creditors. The rules also require officials to report losses that necessitate such reporting under the law, and prohibit using confidential information to harm the company or preventing legally authorized persons from inspecting the company's records, documents, and papers when they have the right to do so under the regulations.