The Saudi Arabia’s Trade and Investment Minister and Head of the General Investment Authority, Majid Al-Qasabi, has confirmed that the Kingdom would introduce a bankruptcy law at the beginning of the next year as part of his efforts to encourage entrepreneurship and attract foreign capital.
The government initiative comes a year after the UAE introduced its bankruptcy law and a new regulatory authority for financial restructuring. The measure not only aimed to remove the threat of jail for executives of businesses in distress but also to increase the foreign financial inflows in the country.
According to the current Saudi legislation, it is not possible indebted companies to wind up their activities. The new stipulations include restructuring the economy and making it more attractive for international capital. In addition to the bankruptcy law, the Saudi Arabia is also planning to introduce a new commercial mortgage system. It is expected to pass the approval by the Shoura Council in the next couple of weeks. Soon after that, the Kingdom will also propose a new commercial franchising system.
The government in Saudi Arabia has been working hard to revise its National Transformation Program 2020. Following the sharp decrease in revenues as oil prices went down, the Kingdom has been trying to modernize its economy and make it less dependent on oil.
Earlier in August, the government in Bahrain has also announced its plans to introduce new bankruptcy law.