REGULATORY FRAMEWORK FOR SINGLE PERSON LIMITED LIABILITY COMPANIES IN SAUDI ARABIA: ENSURING COMPLIANCE, CAPITALIZATION, AND ETHICAL BUSINESS PRACTICES

Abstract

This research aims to investigate the concept of the SPLLC and how it is organized legally under the Saudi Companies Law. This paper focuses on the incorporating process of the SPLLC, management of the SPLLC, monitoring, and termination. The SPLLC, known as Single Person Limited Liability Company, is also known as a Limited Liability Company (LLC) but with only one member and is considered a new form of company in Saudi Arabia. According to the findings of this study, both natural and legal Saudi persons as well as non- Saudi persons are able to establish a SPLLC in Saudi Arabia. With no limitation on the number of SPLLC that natural and legal persons can own. Moreover, the minimum share capital for the establishment of SPLLC has not specifically limited on the Saudi Companies Law, although, it is recommended for the Law to requires SPLLCs to allocate a sufficient capital to achieve the purpose of establishing the company. This paper then recommends seven changes in order to strengthen the Saudi Companies Law. Recommendations include but not limit to, requiring a single owner of SPLLC to evaluate all in-kind contributions provided in the company’s capital by a selected financial consultant, setting a required sufficient capital for the incorporation of a SPLLC, and defining what would happen if the sole owner of the SPLLC dies to effectively protect the company’ creditors and ensure legal clarity in SPLLC management following the sole owner’s death.