Article 16 of the Saudi Commercial Court Law
المادة 16 من النظام التجاري نظام المحكمة التجارية · الفصل الثاني: في الشركات
The article provides that there are other partnerships customary among merchants that are not listed, and their customary requirements apply to them.
Official text (Arabic)
This article has not been amended since the law was issued.
ما عدا الشركات المذكورة آنفا توجد شركات أخرى متعارفة بين التجارة تجري فيها مقتضياتها.
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 16 explained in plain English
This article comes after the definition of named types of partnership, including the mudaraba partnership, which Article 15 defined as one where the capital comes from one party and the work from the other, to establish that these types are not exhaustive.
The text says that apart from the partnerships listed there are other partnerships customary among merchants, and that their requirements apply to them. In practice this means:
- The partners are not bound to choose only one of the named types.
- An unnamed partnership is governed by its requirements, that is, what is customary among merchants for that type.
The article does not name these partnerships or set out their rules, so no details of a particular type can be drawn from it. Article 17 remains applicable to all partnerships, as profits are divided in the manner the partners agreed.
If your partnership does not fit the named types, it is useful to consult a lawyer who specializes in companies to determine the provisions that govern it.
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 16 of the Saudi Commercial Court Law
Are the types of partnership in the law limited to mufawada, inan and mudaraba?
No. The article provides that there are other partnerships customary among merchants that are not listed.
What governs customary partnerships that are not named?
Their requirements apply to them, that is, what is customary in them among merchants, according to the text of the article.
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 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 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.