المدونة

In the Kingdom of Saudi Arabia, the company is considered the important and fruitful commercial economic entity within the financial sector. This economic entity, even if it is established in the Kingdom based on a Memorandum of Association or Articles of Association, whereby two or more persons are committed to each of them contributing to a profit-oriented project by providing a share of money, work, or Both of them together to share the profit or loss arising from this project

There are many reasons that result in the termination of companies, some of which are general and others related to a specific type of company, and then this expiration entails dividing their funds among the partners and liquidating them with the aim of obtaining their rights and paying off their debts.

The Saudi bankruptcy system came with other advantages for both sides, whether the debtor or the creditor, as one of the most important objectives of setting up the Saudi bankruptcy system and its executive regulations is to carry out a preventive settlement to facilitate the debtor’s reaching an agreement with his creditors on a settlement of his debts and the debtor retains the management of his activity, or financial reorganization to facilitate reaching an agreement with his creditors. The debtor has entered into an agreement with his creditors on the financial reorganization of his activity under the supervision of the financial reorganization trustee, or liquidation by listing the creditors’ claims, selling the bankruptcy assets and distributing its proceeds to the creditors under the management of the liquidation trustee

The company shall enter if the period of liquidation has expired in accordance with the provisions of the law, and the partners, the general assembly, or the shareholders must take liquidation procedures, and the company shall retain the legal personality to the extent necessary for liquidation.

The new Saudi Companies Law has provided for the general reasons (i.e. applicable to all types of companies) that lead to the termination of companies, taking into account the reasons for expiration of each form of companies and the procedures to be followed, so according to the provisions of the system the company shall lapse

What are the cases of resorting to the financial reorganization procedure? The financial reorganization procedure is one of the procedures that the legislator has recognized the merchant’s right to resort to in some cases or some difficulties that his commercial activity may encounter, and in the following paragraph we will refer in detail to the most prominent cases of resorting to financial reorganization to protect against the occurrence of liquidation.

One of the most popular phrases circulated in bankruptcy systems is the phrase preventive settlement, so what is meant by the latter, very briefly, the preventive settlement is a procedure whose main objective is to protect all commercial activities. From debts and distributing debts to Dania.