Riyadh- Saudi companies whose losses exceed 50% of their capital now have seven months only before being completely liquefied. Administrations of these companies are taking serious steps to enhance their financial conditions.
Asharq al-Awsat newspaper was informed that the majority of these companies will depend on decreasing or increasing their capital.
These updates coincide with the previous clarification of the Saudi Capital Market Authority (CMA) regarding the implementation of the companies’ new system. Joint stock companies whose losses exceed half the capital were granted one year duration to enhance their condition before resorting to liquidation.
CMA called on shareholders, heads and members of boards of directors of these companies to make use of this period to improve their companies’ conditions according to terms of article 150 of the new system. The deadline is 22 April 2017.
In a related matter, the Saudi stock exchange index dropped 1.9% during Sunday’s session, closing at 6,060 points and losing 116 points. Sunday’s trading also witnessed a decline in monetary liquidity, reaching its lowest since six years USD426 million (SAR1.6 billion).
Moreover, Tadawul revealed that the net foreign sales via direct foreign investment reached during 1-8 September USD1.04 million (SAR3.9 million) while net foreign sales through mutual agreements reached USD52.3 million (SAR196.4 million) during the same week.
Economist Dr. Khalid Yahia told Asharq al-Awsat that these companies have a difficult mission to be accomplished within seven months. “Companies whose losses are less than 65% of the capital might get back on track through increasing the capital,” said Yahia.
Article 150 includes the measures to be taken by the company officer or auditor when the losses accumulate to 50% or even more of the capital.