Article 14 of the Saudi Commercial Court Law
المادة 14 من النظام التجاري نظام المحكمة التجارية · الفصل الثاني: في الشركات
The article defines the joint-stock company as a branch of the inan company whose capital is divided into shares and which is managed by chosen agents who are not personally liable for its undertakings.
Official text (Arabic)
This article has not been amended since the law was issued.
من فروع شركة العنان المساهمة وهي الشركة المنعقدة على رأس مال معلوم يقسم إلى أسهم، والأسهم إلى حصص متساوية المبالغ من غير تسمية أصحاب الحصص، ويتولى إدارتها وكلاء مختارون ويجوز تعيينهم وعزلهم ونصبهم والمديرون هم المسئولون عن الأعمال الموكولة إلى عهدتهم وليسوا بمديونين ولا كافلين تعهدات الشركة.
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 14 explained in plain English
This article shows that the joint-stock company is one of the branches of the inan company defined in Article 13, and sets out its characteristics:
- It is formed on known capital divided into shares, and the shares into portions of equal amounts.
- The portions are without naming their owners.
- It is managed by chosen agents who may be appointed, dismissed and installed.
As for the liability of the managers, the text defines it precisely:
- They are responsible for the work entrusted to them.
- They are neither debtors nor guarantors of the company's undertakings, that is, they are not claimed against for the company's debts out of their own money in their capacity as managers.
Being a branch of the inan company means, under Article 13, that a partner bears no loss beyond his share of the capital.
This article is part of an old law, and joint-stock companies today have detailed provisions that may be in other laws, so it is advisable on any practical matter to consult a lawyer who specializes in companies.
Practical example
Khaled is appointed manager of a joint-stock company in Riyadh, and the company then fails to pay a debt to a supplier. Under this article, Khaled is responsible for the work entrusted to him, but he is neither a debtor nor a guarantor of the company's undertakings in his capacity as manager.
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 14 of the Saudi Commercial Court Law
What is a joint-stock company under this law?
It is a branch of the inan company, with known capital divided into shares and portions of equal amounts without naming their owners, managed by chosen agents.
Is the manager of a joint-stock company liable for its debts?
The managers are responsible for the work entrusted to them, and are neither debtors nor guarantors of the company's undertakings.
May the joint-stock company's managers be dismissed?
Yes. The text allows the managing agents to be appointed, dismissed and installed.
More articles on Companies Under the Commercial Law
- Article 11
The article defines a company as a contract between two or more people to make a lawful profit, and divides companies into mufawada, inan and mudaraba.
الشركة عقد بين اثنين فأكثر يلتزم به تصرف مخصوص لتحصيل ربح مشروع؛ وهي ثلاثة أنواع: شركة المفاوضة ، وشركة العنان ، وشركة المضاربة .
- Article 12
The article defines the mufawada (general partnership) company as one with known equal capital, in which partners are jointly and severally liable for the company's undertakings.
شركة المفاوضة المعبر عنها بشركة التضامن هي الشركة المنعقدة تحت إمضاء عموم الشركاء على رأس مال معلوم متساو ويكون جميع الشركاء متضامنين متكافلين في كل التعهدات وا
- Article 13
The article defines the inan company as one with known capital in which each partner has a specific share, and no partner bears a loss beyond his share.
شركة العنان هي الشركة المنعقدة بين اثنين فأكثر على رأس مال معلوم لكل من الشركاء حصة معينة فيه ولا يتحمل الشريك ضررا ولا خسارة زيادة على حصته من رأس المال.
- Article 15
The article defines the mudaraba company as one in which one party provides the capital and the other the work, and all share in the profit.
شركة المضاربة هي الشركة المنعقدة على أن يكون رأس المال من طرف والعمل من الطرف الآخر لاشتراك الجميع في الربح الحاصل.
- Article 16
The article provides that there are other partnerships customary among merchants that are not listed, and their customary requirements apply to them.
ما عدا الشركات المذكورة آنفا توجد شركات أخرى متعارفة بين التجارة تجري فيها مقتضياتها.
- Article 17
The article provides that the profits of all partnerships are divided among the partners in the manner they agreed.
كل الشركات تقسم أرباحها على الوجه الذي وقع الاتفاق عليه وبين الشركاء.
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.