A look at objectives of holding companies in Saudi Arabia

Alujain Corp.’s shareholders approved on Feb. 4 rebranding the company to Alujain Holding.

According to the Saudi corporate law, the holding company can either be a joint stock company (JSC) or a limited liability company (LLC), which aims to acquire other JSCs or LLCs known as subsidiaries; by owning more than 50% of their capital or controlling its board formation.

The objectives of a holding company include:

(i) Managing subsidiaries or participating in managing and supporting other associate companies;

(ii) Investing its capital in stocks and other securities;

(iii) Owning properties and related equipment to conduct business;

(iv) providing loans and financing to the subsidiaries;

(v) Owning industrial property rights, patents, industrial brands, rights of concession and other non-material rights; making the optimum use of them and leasing them;

(vi) Any other valid project in line with the company’s nature.

According to Article 184, subsidiaries cannot own shares in the holding company. Any act leading to the transfer of shares or stocks from the holding company to the subsidiary will be considered null and void.

As per Article 185, the holding company must prepare, at the end of every financial year, consolidated financial statements with its subsidiaries.