The Saudi Companies Law has undergone a major legislative transformation in recent years, driven by the Vision 2030<\/strong> objectives of enhancing the competitiveness of the business environment, developing corporate structures and achieving the highest levels of transparency and governance in both the public and private sectors. With the growing importance of holding companies as a strategic investment tool, whether through the Public Investment Fund or private groups, it has become essential to understand the legal framework governing the relationship between the holding company<\/strong> and the subsidiary<\/strong>. In this article Shehab Alsaleh Lawyers & Legal Advisors<\/a> provides a comprehensive explanation of the definitions, types, statutory restrictions and key differences between them under the new Companies Law.<\/p>\n Article 216<\/strong> of the Companies Law defines a holding company as:<\/p>\n A joint stock company, simplified joint stock company or limited liability company that establishes companies or owns shares or interests in existing companies, which become its subsidiaries.<\/p><\/blockquote>\n The legislator therefore did not create a new, independent legal form; the holding company is a functional description that applies to any company (joint stock, simplified joint stock or LLC) that controls or invests in other companies.<\/p>\n Holding companies are among the most important tools for implementing Vision 2030<\/a>, contributing to:<\/p>\n The State or one of its entities holds the majority stake; often used for strategic projects (infrastructure, energy, transport, urban development).<\/p>\n Established by individuals, families or private investors to diversify investments, protect family assets, or manage a group of companies in real estate, retail, contracting and services.<\/p>\n Jointly owned by the State and the private sector (or foreign investors), combining commercial and national objectives, and usually subject to government oversight of key decisions.<\/p>\n Article 218<\/strong> of the Companies Law sets strict rules to prevent abuse of control structures:<\/p>\n For the full text of the Companies Law: Laws portal \u2013 Bureau of Experts<\/a><\/p>\n Article 217<\/strong> provides that a company is a subsidiary if any of the following applies:<\/p>\n1. Definition of a Holding Company Under Saudi Law<\/h2>\n
The Strategic Role of Holding Companies in the Kingdom<\/h3>\n
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2. Types of Holding Companies in Saudi Arabia<\/h2>\n
Public Holding Company (Government or Semi-Government)<\/h3>\n
Private Holding Company<\/h3>\n
Mixed Holding Company<\/h3>\n
3. Statutory Restrictions on Cross-Ownership<\/h2>\n
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4. Definition of a Subsidiary<\/h2>\n
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5. Key Differences Between Holding and Subsidiary Companies<\/h2>\n