The Legal Reasons and Consequences of Dissolving a Company: A Comparative Analysis Between the Kingdom of Saudi Arabia and the United Kingdom

Abstract

Companies are a vital part of the economy of a state because they fuel growth, drive employment, and contribute substantially to government revenues through taxation. Consequently, the proliferation and resilience of these entities serve as barometers for a nation's strength and stability. Conversely, their dissolution signals a loss of these advantages for societies and nations. When a company dissolves, the company ceases its operations and the company comes to the end of its legal existence. Accordingly, due to the significance of company dissolution on modern day economies, this article aims to explore the legal reasons and consequences of dissolving a company in two different legal systems. This article will explore company dissolution under English law - a historic and pivotal legal system – and under the law of Saudi Arabia – a legal system influenced by Islamic law.The goal of this study is to explore and analyse the law pertaining to company dissolution in order to understand the causes of dissolution and the impact following a company dissolving. This analysis has revealed that modern legal systems need to view company dissolution through a different lens; focusing on fostering business continuity wherever feasible. The legal approach adopted under both English law and the law of Saudi Arabia sets a low threshold in order to trigger the dissolution of a company. Importantly, as this article will demonstrate, setting a low threshold is economically undesirable for a state