Article 548 of the Saudi Civil Transactions Law

المادة 548 من نظام المعاملات المدنية · الفرع الثالث: انتهاء عقد الشركة

If a partnership ends in respect of one partner but continues among the others, his share is valued as at the time the ground for ending occurred and paid in cash to him or his heirs, unless otherwise agreed.

Official text (Arabic)

This article has not been amended since the law was issued.

إذا انتهت الشركة في حق أحد الشركاء واستمرت بين الباقين، قُدِّر نصيب الشريك الذي انتهت الشركة في حقه بحسب قيمته وقت حصول السبب الذي أدى إلى انتهاء الشركة في حقه، ويُدفع له أو لورثته نقدًا، ما لم يتفق على خلاف 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 548 explained in plain English

This article explains how to settle the right of a partner in whose respect the partnership ends while it continues among the remaining partners, for example where he dies or withdraws and there is an agreement that the partnership continues.

The article sets three rules:

Time of valuation: the partner's share is valued as at the time the ground occurred that led to the partnership ending in respect of him, not at the time of the claim or the time of payment.
Method of payment: the share is paid in cash.
Who is paid: the payment goes to the partner himself, or to his heirs if the ground for ending was his death.

These rules are not binding in every case; the article ends with the phrase "unless otherwise agreed", so the partners may agree on another method of valuation or payment.

This article is linked to Article 547, which allows an agreement that the partnership continues among the remaining partners if one of them dies, is placed under interdiction, becomes insolvent, has liquidation proceedings opened against him, or withdraws. Where the whole partnership ends, Article 549 governs the liquidation and division of its assets.

Because valuing the share can be disputed, you can consult a lawyer who specializes in company matters or use a valuation expert.

Practical example

Sultan was a one-third partner in a civil partnership running rest houses in Taif, and the contract provided that the partnership continues among the remaining partners if one of them dies. Sultan died in the month of Ramadan, so his third is valued at its value at that time and paid in cash to his heirs, unless the contract provided for another method.

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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