Members of Saudi Arabia’s Shoura Council have approved a draft bankruptcy law as the kingdom moves to regulate insolvency procedures by early next year.
Saudi Gazette reports that the law comprises 231 articles that cover bankruptcy procedures, preventative settlements, administrative settlements and financial restructuring with particular attention to minor debtors.
Other aspects include procedures for guarantees and clearance associated with financial transactions, right to object to rules and decisions, priority of debts and regulation for deceased debtors.
The draft law will be applicable to all people involved in businesses or commercial activities in the kingdom when it is finalised, according to the publication.
It will also apply to non-Saudi commercial and vocational companies and other entities, organisations and investors.
The new legislation, which is expected to be implemented in the first quarter of 2018, is the latest reform by the kingdom as it seeks to attract foreign investment and boost the private sector.
Like many other Middle Eastern countries, current Saudi laws do not offer any easy way to wind up the activities of indebted companies.
Bankruptcy legislation was also implemented in the neighbouring United Arab Emirates at the end of last year.