Saudi Arabia’s long awaited bankruptcy law took effect from August 18, the Saudi Ministry of Commerce and Investment said.
Majed Al Rasheed, secretary general of the bankruptcy committee at the Ministry of Commerce and Investment, said the comprehensive framework will improve Saudi’s international standing in dealing with insolvency cases.
The kingdom currently ranks 168th out of 190 nations for settling bankruptcy cases in the World Bank's Ease of Doing Business ratings.
The Saudi government authorised the new laws in February. The regulations consist of 231 clauses and 17 chapters, laying out the procedures for bankruptcy.
Experts say the move will help attract foreign and domestic investment in private businesses as the country looks to fulfil its Saudi Vision 2030 goals that seek to bolster the growth of the country’s non-oil sector.
In a written legal note posted online, Dario Najm, an associate in the corporate and M&A practice of Ahmad bin Hezeem & Associates in Saudi Arabia, said that the law “tries to find the perfect balance between the interests of investors and creditors and allows indebted corporations to maintain their operations while gradually settling their debts.”
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