Article 3 of the Saudi Implementing Regulations of the Bankruptcy Law
المادة 3 من اللائحة التنفيذية لنظام الإفلاس · الفصل الأول: أحكام عامة
This article of the Regulations requires the debtor's directors or board members, before a voluntary liquidation item is put to a vote, to submit an auditor's report and a written declaration to the Ministry or the Capital Market Authority.
Official text (Arabic)
This article has not been amended since the law was issued.
يلتزم أعضاء مجلس إدارة المدين أو مديروه أو أعضاء مجلس مديريه أو من في حكمهم - قبل إدراج بند التصفية الاختيارية للمدين؛ للتصويت عليه في جمعية المساهمين أو جمعية الشركاء- بأن يقدموا إلى الوزارة أو هيئة السوق المالية -بحسب الأحوال- ما يأتي:
أ - تقرير يعده من مراجع الحسابات مرافقة له ميزانية محدثة، يتضمن التأكيد على كفاية أصول المدين لسداد جميع ديونه بنهاية مدة التصفية الاختيارية المقترحة، على أن يقدم التقرير خلال مدة لا تزيد على (أربعة عشر) يوماً من تاريخ إعداده.
ب - إقرار مكتوب منهم بأن المدين مستمر في سداد ديونه.
This is the official Arabic wording, the only legally binding version. We do not translate the law itself; the explanation below is ours. Official source: Bureau of Experts at the Council of Ministers
Article 3 explained in plain English
This article of the Implementing Regulations of the Bankruptcy Law sets a prior requirement before an item on the debtor's voluntary liquidation is put to a vote in the shareholders' assembly or the partners' assembly.
Who bears the obligation? The members of the debtor's board of directors, or its managers, or the members of its board of managers, or those in a similar position.
To whom is it submitted? To the Ministry or the Capital Market Authority, as the case may be. The article does not specify when the body is the Ministry and when it is the Authority.
What must be submitted?
- An auditor's report accompanied by an updated balance sheet, confirming that the debtor's assets are sufficient to pay all its debts by the end of the proposed voluntary liquidation period. This report must be submitted within a period not exceeding 14 days from the date it is prepared.
- A written declaration from these members or managers that the debtor is continuing to pay its debts.
Timing of the obligation: this takes place before the voluntary liquidation item is put to a vote, not after the vote. The documents therefore precede presenting the item to the assembly.
These two requirements show that voluntary liquidation in this article is tied to a debtor whose assets are sufficient to pay its debts and who is continuing to pay: the report confirms the sufficiency of assets, and the declaration confirms the continuing payment.
The article does not state the consequences of failing to submit these documents, nor the voting procedures themselves. Anyone who manages a company and is considering liquidating it voluntarily would do well to consult a lawyer specializing in bankruptcy and company cases.
Practical example
The partners of a limited liability company in Riyadh decided to end its activity even though it pays its debts regularly. Before including the voluntary liquidation item on the partners' assembly agenda, the manager asks the auditor for a report with an updated balance sheet confirming that the assets are sufficient to pay all debts by the end of the proposed liquidation period, and submits it to the Ministry or the Capital Market Authority, as the case may be, within 14 days of its preparation, together with a written declaration that the company is continuing to pay.
Translated from our Arabic explanation with machine assistance. For guidance only; it does not replace advice from a lawyer on your situation.
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Frequently asked questions about Article 3 of the Saudi Implementing Regulations of the Bankruptcy Law
What documents are required before voting on a company's voluntary liquidation?
An auditor's report with an updated balance sheet confirming that the debtor's assets are sufficient to pay all its debts by the end of the proposed liquidation period, and a written declaration from the managers or board members that the debtor is continuing to pay its debts.
When must the auditor's report be submitted?
Within a period not exceeding 14 days from the date it is prepared, and before the voluntary liquidation item is put to a vote.
To which body are the voluntary liquidation documents submitted?
To the Ministry or the Capital Market Authority, as the case may be.
More articles on Liquidation of the Debtor's Assets
- Article 5
After registration of a request to open any liquidation procedure, the court may appoint a trustee to replace the debtor in managing its activity, or seize the debtor's assets.
للمحكمة -من تلقاء نفسها أو بناء على طلب ذي مصلحة- أن تأمر, بعد قيد طلب افتتاح أي من إجراءات التصفية، بأي مما يأتي: أ - تعيين أمين مدرج في قائمة الأمناء يحل محل
- Article 11
The trustee sells the bankruptcy estate's assets after the judgment or decision opening the liquidation procedure, or the liquidation procedure for small debtors, becomes final.
يتولى الأمين بيع أصول التفليسة بعد اكتساب حكم أو قرار افتتاح إجراء التصفية أو إجراء التصفية لصغار المدينين الصفة النهائية.
- Article 21
A natural-person debtor who has not been discharged from a remaining debt must notify creditors if he starts a profit-making activity within 24 months of ending liquidation, and apply to distribute any money that comes to him.
1- على المدين ذي الصفة الطبيعية -الذي لم يبرأ من دين متبق في ذمته- تبليغ دائنيه عند بدء ممارسته نشاطاً تجارياً أو مهنياً أو يهدف إلى تحقيق الربح خلال (أربعة وعش
- Article 26
This article sets out the creditors' committee's tasks in representing the creditors, including approving the sale of any asset worth more than a quarter of the bankruptcy estate's assets, and lets its chair set the time and place of meetings.
1- تلتزم لجنة الدائنين بتمثيل الدائنين في المهمات المنصوص عليها في النظام واللائحة، وتشمل مهماتها الآتي: أ - الموافقة على بيع أي أصل تتجاوز قيمته ربع قيمة أصول
- Article 48
This article requires that a creditor's payment request to the debtor under paragraph (2/c) of Article 93 of the Law be dated and state the amount of the debt and its cause.
يجب أن يكون طلب سداد الدين الذي يقدمه الدائن إلى المدين بموجب الفقرة ( 2 / ج ) من المادة (الثالثة والتسعين) من النظام مؤرخاً ومحدداً فيه مقدار الدين وسبب نشوئه.
- Article 49
This article requires a debtor who requests liquidation to notify its creditors of the request and hearing date within 7 days of registering it, and allows a creditor to object at least 5 days before the hearing.
على المدين -إذا تقدم بطلب افتتاح إجراء التصفية- تبليغ دائنيه بالطلب, وموعد جلسة النظر فيه خلال (سبعة) أيام من تاريخ قيده. وللدائن تقديم اعتراض إلى المحكمة على ا
The texts are reproduced from the official website of the Bureau of Experts at the Council of Ministers for reference; where they differ, the officially published Arabic text prevails. This content is not legal advice.