Article 15 of the Saudi Commercial Court Law
المادة 15 من النظام التجاري نظام المحكمة التجارية · الفصل الثاني: في الشركات
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.
Official text (Arabic)
This article has not been amended since the law was issued.
شركة المضاربة هي الشركة المنعقدة على أن يكون رأس المال من طرف والعمل من الطرف الآخر لاشتراك الجميع في الربح الحاصل.
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 15 explained in plain English
This article defines the mudaraba company, one of the types of company regulated by the law. It rests on a clear distribution of roles:
- Capital from one party: the owner of the money.
- Work from the other party: the mudarib, who manages the money and works with it.
- All share in the profit made.
Mudaraba thus differs from the joint-stock company defined in Article 14, which rests on known capital divided into shares and managed by chosen agents, whereas mudaraba combines money on one side with effort on the other.
The article does not set the ratio of profit distribution between the owner of the money and the worker, but provides that all share in the profit made. It also does not address who bears the loss, so no provision on that should be inferred from it.
Because of the importance of setting profit ratios and each party's obligations in writing, it is advisable to use a lawyer who specializes in commercial cases when drafting a mudaraba contract.
Practical example
Abdullah provides SAR 200,000, and Saeed runs a shop in Taif with this money, and they agree to share the profit. This is a mudaraba company: the money is from Abdullah and the work from Saeed, and the profit is between them as they agreed.
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 15 of the Saudi Commercial Court Law
What is a mudaraba company?
It is a company in which the capital is from one party and the work from the other party, and all share in the profit made.
How is the profit divided in a mudaraba?
The article does not set the profit ratio, but provides that all share in the profit made.
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 14
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.
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
- 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.