Article 554 of the Saudi Civil Transactions Law
المادة 554 من نظام المعاملات المدنية · الفرع الثاني: آثار عقد المضاربة
The mudarib must provide the capital owner with information on the mudaraba's business and render an account when its term ends, or every year if its term is unspecified, unless otherwise agreed.
Official text (Arabic)
This article has not been amended since the law was issued.
على المضارب أن يزود رب المال بالمعلومات المتعلقة بأعمال المضاربة وأن يقدم له حسابًا عنها عند انتهاء مدتها، وإذا كان العقد غير معين المدة وجب تقديم هذه المعلومات في نهاية كل سنة، وذلك كله ما لم يتفق على خلافه.
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 554 explained in plain English
This article sets out the mudarib's duty of disclosure and accounting to the capital owner, because the money belongs to the capital owner while the work is in the mudarib's hands.
The mudarib has two obligations:
- Providing the capital owner with information about the mudaraba's business.
- Rendering an account of the mudaraba's business when its term ends.
Contract of unspecified duration: if the mudaraba has no fixed term, this information must be provided at the end of each year, so that the capital owner is not left without information throughout an open-ended period.
Agreement to the contrary is allowed: the article ends with the phrase "all of that unless otherwise agreed", so the parties may agree on another arrangement, such as more or less frequent reports.
This article is linked to Article 553, which gives the mudarib the right to manage and deal with the capital after it is handed to him; the duty of disclosure corresponds to that authority. It is also linked to Article 555, which binds the mudarib to what the contract restricts him to if it is restricted, and permits him to work according to custom if it is unrestricted.
If the mudarib refuses to provide the information or the account, the capital owner can consult a lawyer who specializes in commercial contracts.
Practical example
Hind handed a sum to her relative to work with as a mudaraba in the clothing trade in Riyadh, with no term fixed for the contract and no agreement on the dates of reports. A full year has passed, so the relative must provide her, at its end, with information on the mudaraba's business.
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 554 of the Saudi Civil Transactions Law
Must the mudarib render an account to the capital owner?
Yes. He must provide the capital owner with information on the mudaraba's business and render an account when its term ends, unless otherwise agreed.
When does the mudarib provide information if the mudaraba has no term?
It must be provided at the end of each year, unless otherwise agreed.
Can other dates for reports be agreed?
Yes. The article allows an agreement different from what it provides.
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.