RIYADH, December 13 (CIC) – Saudi Arabia’s Shura Council has approved the draft bankruptcy law, as part of the Kingdom’s efforts to attract foreign investment and encourage private sector activity.
The draft law, which consists of 231 articles in 17 chapters, aims to regulate bankruptcy procedures for preventive settlement, financial reorganization, liquidation, preventive settlement for small debtors, financial reorganization for small debtors, liquidation for small debtors and administrative liquidation.
According to the official Saudi Press Agency, the provisions of this law passed on Monday by the Shura Council will apply to any person who carries on business or profit-making activities in the Kingdom.
Such provisions shall also apply to commercial and professional companies, entities, organizations and non-Saudi investors.
Saudi Arabia is also working on new laws regarding commercial mortgages and commercial franchising.
In May, the International Monetary Fund (IMF) said these planned laws show Saudi Arabia’s efforts to progress towards identifying and reducing obstacles to private sector growth.The IMF said at the time that Saudi Arabia is making “good progress in identifying and reducing obstacles to private sector growth, including by reducing custom clearance times, making it easier to start a business, and moving toward completion of the new bankruptcy and commercial mortgage laws’’.