Saudi Arabia is set to introduce a bankruptcy law early next year as part of efforts to attract foreign investment and encourage private sector activity, said a report by Al Arabiya citing the Saudi Minister of Trade and Investment Majid Al-Qasabi.
The move comes about a year after the UAE introduced its own new bankruptcy law for businesses, including a new regulatory body for financial restructuring, which was designed in part to remove the threat of jail for executives of companies facing financial distress.
At present, the law in the kingdom does not permit indebted comopanies to wind up their activities but with the introduction of the new bankruptcy law the government plans to restructure the economy and make it more attractive to outside investors.
Saudi Arabia is also planning to combine the new bankruptcy law with a new commercial mortgage system, which is expected to be passed by the Shoura Council within the next two to three weeks, and a new commercial franchising system, which should follow soon after, said the report.
