The company’s contract of incorporation is the legal basis on which the company is built and includes all the data and information of partners, founders, capital and other data, but with the development of laws and regulations in the Kingdom of Saudi Arabia and the acceleration of business and growth of companies, these companies may have to amend their contract of incorporation and here you must seek the help of consultants or lawyers with in-depth experience in Saudi Companies Law and its executive regulations They will guide you through the correct steps and procedures for amending the articles of incorporation.In this article, we will address the most important reasons for amending a company ‘s articles of association, why companies resort to this amendment, and what are the proper procedures for amending the articles of association in accordance with Saudi laws and regulations.

Amending a company’s articles of incorporation is key to growth, expansion, and keeping up with the evolution of legal systems:

Although the company’s memorandum of association in Saudi Arabia is considered the basic and legal document that determines its structure and its legal and commercial path, this document is not static, but requires periodic amendments to keep pace with the company’s developments, market requirements and legal regulations. Here, Invest Global, with its long-standing experience in the field of company formation, provides you with an in-depth look at the most important reasons for amending the company’s memorandum of association in Saudi Arabia, in accordance with the Saudi Companies Law:

1- Amending the company’s capital:

However, growth plans or investment in new projects may require the company to increase its capital. On the other hand, the company may have financial challenges that require a reduction in capital. In this case, amending the memorandum of association is mandatory for companies as it reflects changes in the ownership structure and the nominal value of shares, with the need to adhere to disclosure and transparency procedures to protect the rights of shareholders and creditors.

2- Change of business activity:

Within the strategy of adapting to the market, the company may have to change its business activity or add new activities to keep up with the growing demand or exploit new investment opportunities. This amendment may be radical and therefore requires an amendment to the company’s articles of incorporation to include the new activities and exclude the old ones, and of course it must be ensured that the new activity complies with the laws and regulations in the Kingdom and obtain the necessary licenses before starting to practice it.

3- Entry or exit of partners:

A partner may want to leave the company for personal or professional reasons, or an opportunity may arise to add a new partner with the expertise and resources to support the company’s growth.
This results in a change in the ownership of the capital, distribution of shares, or shares, which requires amending the memorandum of association to document the new partners and their shares, or excluding the departing partners and adjusting the distribution of the remaining shares.

4- Changing the company’s management structure:

The company’s development and growth may require a review of its management structure to meet new market requirements and improve the company’s business performance. This change may include changing the CEO, appointing a new CEO, or even creating new management positions. These changes require amending the memorandum of association to update the names and responsibilities of the persons responsible for managing and making decisions in the company.

5- Changing the profit and loss distribution ratio:

The profit and loss distribution ratio is one of the most important clauses of the memorandum of association, as it determines the share of each partner or shareholder in the company’s profits and losses. Changes in the company’s performance or the emergence of differences may require amending this ratio to achieve justice, incentivize and encourage partners to exert more effort to achieve success. This amendment must be done with the approval of all partners or shareholders and documented in the memorandum of association in accordance with the procedures stipulated by the Companies Law in Saudi Arabia.

6- Changes in regulations that require amending the articles of incorporation:

Laws and regulations in the Kingdom are constantly changing and evolving, which may require amending the memorandum of association to ensure legal compliance and avoid any violations that may expose the company to accountability. This may include amendments related to the legal form of the company, corporate governance, anti-money laundering, consumer rights protection or other legal areas, so it is important to keep abreast of legal updates on an ongoing basis and use specialized legal experts to ensure the company’s compliance with applicable regulations.

How to ensure a successful amendment of your company’s Articles of Incorporation in Saudi Arabia with Invest Global:

If you want to amend your company’s Memorandum of Association in Saudi Arabia in line with your ambitions and find the amendment procedures a bit complicated, we at Invest Global can guide you through the steps of amending the Memorandum of Association step by step:

1. Access the Saudi Business Center platform from here Saudi Business Center
2. Select Service (Amendment of Articles of Incorporation)
3. Fill out the required information in the application form
4. Attach the required documents (a copy of the applicant’s ID, the partners’ decision to approve the amendments, and the amended memorandum of association form)
5. Payment of service fees
6. Review of the application by the Ministry of Commerce
7. If approved, an amendment to the company’s Articles of Incorporation will be issued

Why use Invest Global’s specialized lawyers and consultants to amend your company’s Articles of Incorporation?

Hiring specialized lawyers and legal advisors ensures that you complete the process of amending the articles of incorporation in accordance with the applicable laws and regulations and protects your company’s interests and avoids potential legal risks.

We help you with:

• Analyze and evaluate: Understand the current and future needs of your business and suggest appropriate adjustments.
• Sound legal drafting: The proposed amendments are drafted to ensure compliance with the Saudi Companies Law
• Preparation of documents: Prepare the necessary legal documents and attach them to the amendment request.
• Follow-up actions: Supervise all legal and administrative procedures with the Ministry of Economy until the amendment is finalized.

Feel free to reach out to us today and let us help you realize your vision for your company.