Article 13 of the Saudi Advertising Boards Rules

Article 13 provides that the advertising contract with the competent body is personal to the contracting company, so it may not be freely transferred to another. In detail:

• What is prohibited: the company or establishment contracted for the advertisement assigning the contract in whole or any part of it to any other party.
• The exception: assignment is permitted after the written approval of the competent body. Oral approval is not enough under the text.
• The consequence: if the company assigns it without this approval, the competent body has the right to terminate the contract.

The ban includes partial assignment, for example where the company transfers some of the contracted sites to another company. The text makes termination of the contract a right of the competent body, which it may exercise.

The article is linked to Article 14, which gives the body competent for leasing the right to cancel the contract if the company violates one of its terms, without bearing any financial obligation that may result from cancellation. It is also linked to Article 12, which provides that the contract period for leasing sites leased from government bodies may not exceed three years.

A company thinking of selling its business or transferring some of its contracts must obtain written approval first. To assess the position in an acquisition or contract transfer, its owner would do well to consult a lawyer specializing in commercial matters and government contracts.