Article 204 of the Saudi Bankruptcy Law
المادة 204 من نظام الإفلاس · الفصل الثالث عشر: العقوبات والتعاملات القابلة للإلغاء: نطاق التطبيق
The article requires the court to notify the Bankruptcy Committee at once of judgments under this chapter, and the Committee to keep a register of the bans issued under Article 203 whose operative part is public.
Official text (Arabic)
This article has not been amended since the law was issued.
1- تبلغ المحكمة لجنة الإفلاس بالأحكام الصادرة بموجب هذا الفصل فور صدورها.
2- تنشئ لجنة الإفلاس سجلاً لحفظ ما يصدر من أحكام بمقتضى الفقرة (2) من المادة (الثالثة بعد المائتين) من النظام ويكون منطوق الحكم متاحاً لاطلاع العموم، وفقاً لما تحدده اللائحة.
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 204 explained in plain English
This article deals with what happens after judgments are issued for the criminalized acts, and sets two rules:
- Notification: the court notifies the Bankruptcy Committee of judgments issued under this chapter as soon as they are issued.
- The register: the Bankruptcy Committee sets up a register to keep the judgments issued under paragraph 2 of Article 203, and the operative part of the judgment is made available for public inspection, as specified by the Implementing Regulations.
The judgments meant in paragraph 2 of Article 203 are the additional penalties that the court may impose for a period not exceeding 5 years: a ban on managing any for-profit establishment or running its business, a ban on voting on decisions relating to nominating, standing as a candidate for, or choosing a candidate in any for-profit establishment, and a ban on owning shares or stakes if this results in the convicted person carrying out management work.
The practical benefit of the register is that these judgments bar the convicted person from certain roles in for-profit establishments, so making their operative part available to the public lets companies, partners and those dealing with him know the ban exists. The details of the register and how to inspect it are referred by the article to the Implementing Regulations.
Article 205 then allows the court, when considering imposing the penalties stated in Article 203, to order, at the request of an interested party, the nullity of a transaction, the recovery of assets, or compensation. For an assessment of a specific situation, consult a lawyer specializing in bankruptcy and commercial cases or in criminal cases.
Practical example
A company in Al-Khobar wants to appoint a new chief executive and fears a judgment may have been issued banning him from managing for-profit establishments. It can consult the register set up by the Bankruptcy Committee, as the operative part of these judgments is made available for public inspection as specified by the Implementing Regulations.
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 204 of the Saudi Bankruptcy Law
Are bankruptcy judgments banning company management public?
Yes. The Bankruptcy Committee sets up a register to keep the judgments issued under paragraph 2 of Article 203, and their operative part is made available for public inspection as specified by the Implementing Regulations.
When is the Bankruptcy Committee notified of judgments in bankruptcy crimes?
The court notifies it of judgments issued under this chapter as soon as they are issued.
Articles this article refers to
More articles on Bankruptcy Offenses and Voidable Transactions
- Article 71
At an interested party's request, the court may annul the debtor's disposal of estate assets outside its usual business in breach of Article 70 and recover the assets, taking into account the rights of good-faith third parties.
إذا تصرف المدين في أي من أصول التفليسة خارج نطاق مزاولة نشاطه المعتاد بالمخالفة لحكم الفقرة (1/ن) من المادة (السبعين) من النظام، فللمحكمة أن تقضي -بناء على طلب
- Article 174
The article requires the Bankruptcy Committee to refer the matter to the relevant authority if it sees a need for further verification because of suspicion of a crime or violation in any claim or act.
على لجنة الإفلاس -إذا رأت حاجة لإجراء مزيد من التحقق لوجود شبهة جريمة أو مخالفة منصوص عليها في النظام في أي مطالبة أو تصرف- إحالة الأمر إلى الجهة المعنية.
- Article 200
The article lists acts by an individual debtor, a debtor's managers, board members, officers and others that violate the law if committed before or during bankruptcy and harm others.
دون الإخلال بأحكام الأنظمة ذات العلاقة، يعد مخالفاً لأحكام النظام كل مدين ذي صفة طبيعية أو مدير لدى مدين أو عضو في مجلس إدارته أو مجلس مديريه أو أي من مسؤوليه أ
- Article 201
The article lists acts that violate the Bankruptcy Law if committed by any person before bankruptcy and leading to it, or during it, and harming the parties' rights.
دون الإخلال بأحكام الأنظمة ذات العلاقة، يعد مخالفاً لأحكام النظام كل من ارتكب قبل افتتاح أي من إجراءات الإفلاس واحداً أو أكثر من الأفعال الآتية وأدى إلى افتتاحه
- Article 202
The article lists acts by a creditor, or someone claiming to be one, that violate the law, such as fraudulent claims, harmful arrangements with the debtor and abuse of procedures.
دون الإخلال بأحكام الأنظمة ذات العلاقة، يعد مخالفاً لأحكام النظام كل دائن أو من يدعي هذه الصفة ارتكب قبل افتتاح أي من إجراءات الإفلاس واحداً أو أكثر من الأفعال
- Article 203
The article sets the penalty for the acts criminalized in Articles 200, 201 and 202: imprisonment up to 5 years and a fine up to SAR 5 million or either, with possible bans on managing establishments.
1- دون الإخلال بأي عقوبة أشد ينص عليها نظام آخر، يعاقب كل من ارتكب أياً من الأفعال المجرّمة المنصوص عليها في المواد (المائتين) و(الأولى بعد المائتين) و(الثانية
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.