Saudi Arabia’s cabinet has approved a bankruptcy law that is likely to be a boost to the Kingdom’s efforts to attract investment and provide protection for entrepreneurs, according to reports. King Salman has reportedly endorsed the new law.
As Reuters reports, modern bankruptcy legislation does not currently exist in Saudi Arabia, which creates difficulties for struggling companies seeking to restructure debt with creditors since the 2009 global financial crisis and, more recently, the dip in oil prices.
The major development is just the latest in a series of changes to the Kingdom’s economy and society as part of the Vision 2030 blueprint for reform and modernization.
Fatimah Baeshen, a spokesperson for the Royal Embassy of Saudi Arabia in Washington, said the reforms would help the Kingdom “further facilitate a dynamic business environment that encourages participation” and that the new law was a “critical variable” in further developing the entrepreneurial ecosystem, investments, and more.
The Shoura Council in December approved a draft bankruptcy law, which “consisted of 231 articles distributed over 17 chapters, including general provisions.” That law 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.”
It wasn’t immediately clear if the law approved by the council of ministers is exactly the same as the draft law approved in December.