Article 546 of the Saudi Civil Transactions Law
المادة 546 من نظام المعاملات المدنية · الفرع الثالث: انتهاء عقد الشركة
The article allows partners to agree in the partnership contract on how a partner may be removed and the procedure for it, and any partner may ask the court to remove one or more partners for acceptable reasons.
Official text (Arabic)
This article has not been amended since the law was issued.
1- للشركاء الاتفاق في عقد الشركة على كيفية إخراج أي من الشركاء منها وإجراءات ذلك.
2- لأيٍّ من الشركاء أن يطلب من المحكمة إخراج شريك أو أكثر من الشركة إذا كانت هناك أسباب مقبولة تدعو إلى ذلك.
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 546 explained in plain English
This article deals with removing a partner from the partnership against his will, and provides two ways to do it.
First way: prior agreement. The partners may agree in the partnership contract on:
- how any partner may be removed.
- the procedures for doing so.
This lets the partners set clear rules for this situation when they draft the contract.
Second way: a request to the court. Any partner may ask the court to remove one or more partners, provided there are acceptable reasons for it. The article does not list these reasons, so the court assesses them case by case.
This article complements Article 545, which deals with a partner withdrawing of his own will, whether from a partnership of unspecified duration or, through the court, from a partnership of fixed duration. It is also linked to Article 547, which lists grounds on which the partnership contract ends, such as the death or withdrawal of a partner, and allows an agreement that the partnership continues among the remaining partners.
To draft a partner-removal clause in the partnership contract, or to assess how strong the reasons are before applying to the court, you can consult a lawyer who specializes in company matters.
Practical example
Five partners in Makkah formed a civil partnership to run a lodge for pilgrims, and the contract provides that a partner who fails to pay his share is removed by a majority decision after a written warning. When one of them defaults, they apply this clause. Had the contract contained no such clause, any of them could have asked the court to remove the partner if there were acceptable reasons.
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 546 of the Saudi Civil Transactions Law
Can a partner be removed from a partnership?
Yes, in line with the method and procedures the partners agreed on in the partnership contract, or at the request of any partner to the court if there are acceptable reasons.
Can one partner ask for another partner to be removed?
Yes. Any partner may ask the court to remove one or more partners if there are acceptable reasons for it.
What are acceptable reasons for removing a partner?
The article does not specify these reasons; the court assesses them in each case.
More articles on Partnership and Mudaraba
- Article 528
The article requires partnership contracts and their amendments to be in writing or be void, while barring reliance on the voidness against third parties and limiting its effect between the contracting parties to the period after a voidness claim is filed.
1- يجب أن تكون عقود المشاركة الواردة في هذا الباب مكتوبة، وإلا كانت باطلة، ولا يجوز أن يحتج المتعاقد بالبطلان تجاه الغير، ولا يكون للبطلان أثر فيما بين المتعاقد
- Article 529
The article defines the partnership as a contract under which two or more partners contribute a share of money, work, or both to a project in order to divide its profit or loss, and excludes partnerships governed by special legal provisions.
1- الشركة عقد يسهم بمقتضاه شريكان أو أكثر بتقديم حصة من مال أو عمل أو منهما معًا في مشروع لاقتسام ما ينشأ عنه من ربح أو خسارة. 2- لا تسري أحكام هذا الفصل على ال
- Article 530
The article bars a partner's influence, reputation or financial credibility from being his share, explains how a non-cash share is valued, and says when a partner's obligation ends if his share is a debt owed by a third party.
1- لا يصح أن تكون الحصة أو بعضها ما للشريك من نفوذ أو سمعة أو ثقة مالية. 2- إذا كانت حصة الشريك غير نقدية، قُدرت الحصة بقيمتها عند التعاقد أو بما يتفق عليه الشر
- Article 531
The article allows a partnership to be based on the partners' joint liability for what they undertake in their obligations for its benefit, makes each partner's share in the capital equal to what he undertook unless otherwise agreed, and allows partners to differ in their obligations.
1- يصح أن تقوم الشركة على أساس تضامن الشركاء فيما يلتزمون به في ذممهم من مال أو عملٍ لمصلحة الشركة، وتكون حصة كل منهم في رأس مال الشركة بقدر ما التزم به في ذمته
- Article 532
The article provides that each partner's share is determined by what he undertook in the partnership contract, and that he may not increase it except with the consent of the other partners.
تتحدد حصة كل شريك بالحصة التي التزم بها في عقد الشركة، ولا يجوز للشريك زيادة حصته عن الحصة المحددة في عقد الشركة إلا بموافقة باقي الشركاء.
- Article 533
The article subjects the guarantee of a partner's share to the rules of sale if it is a right of ownership or another real right, and to the rules of lease if it is merely the use of property.
إذا كانت حصة الشريك حق ملكية أو أي حق عينيّ آخر فإن أحكام البيع هي التي تسري على ضمان الحصة إذا هلكت أو استحقت أو ظهر فيها عيب، وإذا كانت الحصة مجرد الانتفاع با
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.