In force
Saudi Companies Law
نظام الشركات
The Companies Law replaced the earlier Companies Law and the Professional Companies Law. It covers the company forms (general partnership, limited partnership, joint stock, simplified joint stock, limited liability, non-profit and professional companies), holding and subsidiary companies, conversion, merger and division, foreign companies, dissolution and liquidation, and penalties.
- Articles
- 281
- In force
- 281
- Amended
- 0
- Issued
- 1/12/1443 AH
Issued by: مرسوم ملكي رقم (م/132) وتاريخ 1443/12/1هـ · قرار مجلس الوزراء رقم (678) وتاريخ 1443/11/29هـ
Each article shows the official Arabic text, which is the only legally binding version, followed by our plain-English explanation.
Browse Companies Law by topic
Company Formation46 articlesCompany Management and Managers' Liability81 articlesGeneral Partnership19 articlesSimple Limited Partnership9 articlesJoint Stock Company70 articlesShares and Capital Increase48 articlesSimplified Joint Stock Company18 articlesLimited Liability Company30 articlesNon-Profit Company15 articlesProfessional Company19 articlesHolding Company5 articlesCompany Conversion and Merger16 articlesForeign Companies7 articlesCompany Liquidation28 articlesPenalties under the Companies Law20 articles
Articles of the Saudi Companies Law
الباب الأول: أحكام عامة فصل تمهيديArticles 1–34
- Article 1This article defines the key terms of the Companies Law, such as the Ministry, the Authority, the competent authority, relatives and day, and leaves the definition of other terms to the regulations.
- Article 2Article 2 defines a company as a legal entity in which two or more persons contribute to a profit-seeking venture to share its profit and loss, and allows a company to be formed by one person or as a non-profit.
- Article 3Article 3 provides that every company formed under the Companies Law is of Saudi nationality and must have its principal center in the Kingdom.
- Article 4Article 4 sets out the five forms, one of which every company formed under the Companies Law must take.
- Article 5The article regulates a company's trade name: its language and sources, the former partner's consent to the use of his name, the indication of the company's form, and amendment of the name without affecting its rights and obligations.
- Article 6Article 6 states who counts as a founder, regulates submitting the formation application to the commercial register, and gives founders the right to appeal a refusal to the Ministry and then to the competent judicial body.
- Article 7Article 7 specifies the founding document for each form of company, requires it to contain what the Companies Law requires and to be in Arabic, and directs the Ministry to prepare guidance templates.
- Article 8The article requires the formation contract or bylaws and their amendments to be in writing or be void, and to be registered; whoever causes non-registration is liable, and unregistered matters cannot be relied on against third parties.
- Article 9Article 9 provides that a company acquires legal personality upon registration, with limited personality during formation, transfers the founders' acts and expenses to it, and makes those who acted in its name liable if formation is not completed.
- Article 10Article 10 requires a company to be registered with the commercial register and to obtain any necessary licenses from the relevant authorities before pursuing its purposes.
- Article 11The article allows founders, partners and shareholders to conclude agreements regulating their relationship, and a family charter for family companies, and makes them binding provided they do not contravene the Law or the company's founding document.
- Article 12The article requires a company's contracts, receipts and documents to show its name, form, address, e-mail and register number, its capital and the paid-up part, and the words "under liquidation" during liquidation.
- Article 13Article 13 explains that a share may be cash or in kind, or work except in joint stock and simplified joint stock companies, and that capital consists of cash and in-kind shares alone.
- Article 14Article 14 sets out a partner's obligations when contributing a share: guaranteeing it under sale rules if it is a real right, rental rules if it is use of a personal right, and performing the work for the company if the share is work.
- Article 15Article 15 makes every partner a debtor to the company for their share and, if they delay contributing it by the deadline, lets the company demand performance or suspend their share-related rights, while keeping its right to compensation in all cases.
- Article 16Article 16 sets a company's financial year at twelve months fixed by the formation contract or bylaws, with the first financial year allowed to run between 6 and 18 months from registration.
- Article 17Article 17 requires keeping accounting records, preparing annual financial statements and filing them within 6 months of the end of the financial year, and supplying a controlling company with the information it needs.
- Article 18Article 18 requires a company to have a licensed auditor appointed by the partners, general assembly, or shareholders, and regulates the auditor's removal, with notice to the competent authority within 5 days, and resignation by reasoned written notice.
- Article 19The article exempts micro and small companies and the general partnership company from the requirement to appoint an auditor in Article 18, with specified exceptions, and allows holders of 10% of voting rights to request that one be appointed.
- Article 20The article sets the auditor's obligations: independence and the bar on combining roles or conflicts, his right to inspect company documents, submitting his report to the partners or general assembly, keeping secrets, and liability for his errors.
- Article 21Article 21 confirms the right of partners and shareholders to oversee the company's accounts in accordance with the Companies Law and the formation contract or bylaws.
- Article 22Article 22 allows annual or interim distribution of distributable profits, allows recovery of improper distributions, and does not require repayment of properly distributed profits even if the company later makes losses.
- Article 23Article 23 provides that profits and losses are shared in proportion to shares, voids any agreement depriving a partner of profit or exempting them from loss, and allows differing percentages in the formation contract and an exception for a working partner.
- Article 24Article 24 sets a working partner's share of profit and loss, if the formation contract does not fix it, equal to the smallest capital partner's share, and gives a partner who contributes work and money two separate shares.
- Article 25The article states when ownership of shares and stock transfers: by commercial register entry for partnership and limited liability shares, by shareholders' register entry for unlisted joint stock and simplified companies, and under the Capital Market Law for listed ones.
- Article 26Article 26 requires a company's manager and board members to observe duties of care and loyalty, including acting within their powers and in the company's interest, avoiding and disclosing conflicts of interest.
- Article 27Article 27 prohibits a manager or board member from holding an interest in the company's contracts, competing with it without authorization, or exploiting its assets and opportunities, and lets the company seek annulment or compensation.
- Article 28Article 28 makes a manager and board members jointly liable for harm caused by violations and faults, sets out when liability is personal or shared, and permits insuring against it.
- Article 29Article 29 regulates liability actions against management: the company brings them, or holders of 5% may do so on conditions with 14 days' prior notice, and a partner has a personal action for their own harm.
- Article 30The article provides that a discharge of management does not bar the action, and that a liability action will not be heard after 5 years or 3 years, whichever is later, except for forgery and fraud.
- Article 31Article 31 deems a manager or board member to have performed their duty in good faith in a decision if three conditions are met, and places the burden of proving otherwise on the claimant.
- Article 32Article 32 allows the competent judicial body, on a partner's or shareholder's request, to charge the company with the costs of a liability action whatever its outcome, if it was brought in good faith and in the company's interest.
- Article 33Article 33 allows a partner's or shareholder's personal creditor to ask the competent judicial body to collect from the debtor's share of net distributed profits, and then from their share of the surplus on liquidation.
- Article 34Article 34 allows a partner's or shareholder's personal creditor to ask for the sale of what is needed of their shares or stock to collect their right, with other partners' right of redemption and shareholders' priority in specified cases.
الباب الثاني: شركة التضامنArticles 35–50
- Article 35Article 35 defines the general partnership company as one formed by two or more persons, each personally and jointly liable with all their assets for its debts, and in which the partner acquires the status of a merchant.
- Article 36Article 36 sets out the data the formation contract of a general partnership company must contain in particular, from the partners' names and capital to management, profits, and dissolution.
- Article 37Article 37 regulates a general partnership company's management: by the partners or a manager they appoint, with rules on multiple managers, their powers, and the company's commitment to their acts within its purpose.
- Article 38Article 38 makes partners' resolutions in a general partnership company by numerical majority and requires their unanimity to amend the formation contract unless the contract provides otherwise.
- Article 39Article 39 bars a general partnership's manager from acts beyond the company's purpose unless the partners resolve otherwise or the formation contract expressly allows it, and lists acts to which the bar applies in particular.
- Article 40Article 40 bars a partner in a general partnership company, without the other partners' consent, from competing with a like activity or holding an influential stake in a competitor, and sets the penalty for breach.
- Article 41Article 41 bars a non-managing partner in a general partnership from interfering in management, gives them the right to inspect and examine records twice a year, and voids any contrary agreement.
- Article 42Article 42 sets how a general partnership's manager is removed according to whether they are a partner and how they were appointed, allows removal by a final judicial judgment, and provides that removal does not dissolve the company.
- Article 43Article 43 allows a general partnership's manager to resign by notifying the partners in writing at least 60 days before it takes effect, otherwise being liable for compensation, and the company is not dissolved by the resignation.
- Article 44Article 44 bars representing a general partnership's shares in tradable instruments, restricts a partner's assignment of shares to the contract's limits or the other partners' consent, and allows assigning financial rights as between the two parties.
- Article 45Article 45 sets the liability of a new, withdrawing, removed, assigning, and assignee partner for a general partnership's debts, and when each is relieved and when this binds creditors.
- Article 46Article 46 regulates a partner's withdrawal from a general partnership on 60 days' notice, their removal under the contract or by court request, registering it with the commercial register, and judicial dissolution of the company.
- Article 47Article 47 requires a general partnership's profits and losses and each partner's share to be determined at year end, makes the partner a creditor for their profit share, and bars requiring them to restore their share after losses without consent.
- Article 48Article 48 requires, before a partner is asked to pay a company debt from their own funds, that the debt be established by final judgment or enforceable instrument, the company be put on notice, and collection from it prove impossible, and gives the partner recourse against the other partners.
- Article 49Article 49 sets how a partner's share is valued on withdrawal, removal, bankruptcy, or death without heirs joining, by an accredited valuer's report, unless the value or valuation method was agreed.
- Article 50Article 50 provides that a general partnership does not end on a partner's death, interdiction, bankruptcy, or exit unless the contract says so, and regulates continuing with heirs and minors and the case of one remaining partner.
الباب الثالث: شركة التوصية البسيطةArticles 51–57
- Article 51Article 51 defines the simple limited partnership company as having two groups of partners: general partners liable with all their assets and limited partners liable up to their shares, with general partnership rules applying where there is no provision.
- Article 52Article 52 sets out the data a simple limited partnership's formation contract must contain in particular, such as the partners' names, capital, management, resolutions, profits, and dissolution.
- Article 53Article 53 gives a limited partner the right to inspect and examine records twice a year, bars them from external management on pain of full liability, and allows internal management as the formation contract provides.
- Article 54Article 54 allows the general and limited partners to agree in the formation contract that a simple limited partnership will have a general assembly and to set its competences and meeting procedures.
- Article 55Article 55 sets how partners' resolutions are issued in a simple limited partnership unless the contract provides otherwise, and bars a limited partner from requesting dissolution or voting on appointing or removing the manager.
- Article 56Article 56 regulates assignment of shares by limited and general partners in a simple limited partnership, the consent needed to assign to third parties, the assignee's duty to contribute an unpaid share, and admitting new partners.
- Article 57Article 57 provides that a simple limited partnership does not end on a limited partner's death, interdiction, insolvency, bankruptcy, or withdrawal unless the formation contract so provides.
الباب الرابع: شركة المساهمةArticles 58–137
- Article 58Article 58 defines the joint stock company as formed by one or more persons, with capital divided into tradable shares, liable alone for its debts, with a shareholder's liability limited to the value of the shares subscribed.
- Article 59Article 59 requires a joint stock company's issued capital to be at least SAR 500,000, with not less than one quarter paid at formation.
- Article 60Article 60 states that a joint stock company has an issued capital representing subscribed shares and may have an authorized capital, within which the board may increase the issued capital once it has been paid in full.
- Article 61The article lists what the articles of association of a joint stock company must contain and the documents attached to them when applying to incorporate the company.
- Article 62The article requires the founders, if they do not subscribe to all the company's shares themselves during incorporation, to offer the remaining shares for subscription in accordance with the Capital Market Law.
- Article 63The article gives the Ministry and the Authority the power to set the controls, procedures, documents and approvals for incorporating a joint stock company whose shares are offered for public subscription during incorporation or which is listed on the capital market.
- Article 64The article requires the paid portion of the share price to be deposited with a licensed bank in the name of the company under incorporation, and regulates the refund of amounts and the founders' liability if the company is not registered.
- Article 65The article treats a joint stock company as validly incorporated once it is registered in the commercial register, and after that bars hearing any action to annul it for a violation of the Law or the articles of association.
- Article 66The article requires in-kind shares to be valued, on incorporation or a capital increase, by an accredited valuer's report submitted for deliberation, bars those who contributed them from voting on it, and requires their consent to any reduction.
- Article 67The article requires a joint stock company to be managed by a board of at least three members, and allows each shareholder to nominate himself or other shareholders or non-shareholders for membership.
- Article 68The article gives the ordinary general assembly the election of a joint stock company's board, requires members to be natural persons, caps membership at four years, and allows the assembly to remove them.
- Article 69The article regulates electing a new board before the term ends, the resignation of the board or one of its members, filling vacant seats, and interested parties' right to go to the judicial authority if an election cannot be held.
- Article 70The article allows the general assembly, on the board's recommendation, to end the membership of a member who misses three consecutive meetings or five separate ones without a legitimate excuse accepted by the board.
- Article 71The article requires a board member to disclose at once his interest in the company's business and contracts, bars him from voting on them, and provides for nullity and liability in case of violation.
- Article 72The article bars a joint stock company from lending to its board members or their relatives or guaranteeing their loans, voids violating contracts, and excepts banks, finance companies and employee incentive programs.
- Article 73The article provides that a shareholder oversees the board in accordance with the Law and does not interfere in the work of the board or executive management unless he is a member or works in it or acts through the general assembly.
- Article 74The article allows the board to take loans of any term, sell and mortgage company assets, sell and mortgage the business, and release debtors, unless restricted by the articles of association or the general assembly.
- Article 75The article requires the general assembly's approval to sell assets exceeding 50% of the company's total assets, even across several transactions counted from the first transaction within the preceding 12 months.
- Article 76The article sets the forms of remuneration for the board members of a joint stock company, leaves the amount to the ordinary general assembly, and requires full disclosure of it in the board's annual report.
- Article 77The article gives the board the widest powers to manage the company, subject to the general assembly's powers, allows delegation, and binds the company by the board's acts even outside its powers unless the counterparty acted in bad faith.
- Article 78The article regulates the appointment of the chairman, vice chairman, managing director, chief executive and secretary in a joint stock company, and the board's power to relieve them of their posts without ending their membership.
- Article 79The article makes the chairman the representative of a joint stock company before the courts, arbitration and third parties, allows this to be given to the managing director or chief executive, and regulates delegation and the vice chairman's substitution.
- Article 80The article requires a joint stock company's board to meet at least four times a year, sets the quorum, the majority for resolutions and the chairman's casting vote, and allows meetings by modern technology.
- Article 81The article bars a board member from appointing someone else to attend and vote, except another member if the articles of association allow it, and makes a resolution effective from its date of issue as a general rule.
- Article 82The article allows a joint stock company's board to issue resolutions on urgent matters by circulation to all the members with the approval of a majority of them, unless a member requests in writing that a meeting be held to deliberate.
- Article 83The article requires the deliberations and resolutions of a joint stock company's board to be recorded in minutes prepared by the secretary and signed by those present, entered in a special register, and allows modern technology to be used for this.
- Article 84The article sets who chairs a shareholders' general assembly meeting, guarantees each shareholder the right to attend or to appoint a proxy who is not a board member, and allows meeting and voting by modern technology.
- Article 85The article sets the powers of the extraordinary general assembly: amending the articles of association without affecting a shareholder's basic rights or increasing his burdens, deciding whether the company continues or is dissolved, and approving its purchase of its own shares.
- Article 86The article allows the extraordinary general assembly, in addition to its own powers, to issue resolutions on matters of the ordinary general assembly on the same conditions and procedures set for the ordinary assembly.
- Article 87The article gives the ordinary general assembly all matters relating to the company except those for the extraordinary assembly, including electing and removing the board, appointing the auditor, discussing reports and financial statements, and profit distribution and reserves.
- Article 88The article requires the annual ordinary general assembly to be held within the six months following the end of the financial year, sets its agenda items, and allows an extraordinary assembly with the same items to satisfy this.
- Article 89The article makes a general assembly resolution that amends the rights of a particular class of shareholders effective only if those with voting rights in that class ratify it in a special assembly under the extraordinary assembly's rules.
- Article 90The article regulates calling general and special assemblies, obliges the board to call within 30 days at the request of the auditor or shareholders holding 10%, and allows the competent authority to call in specified cases.
- Article 91Article 91 sets when a shareholders' assembly meeting must be called, how and with what content, and lets holders of all voting shares in an unlisted company hold the assembly without call procedures.
- Article 92Article 92 requires one quarter of the voting shares to attend an ordinary general assembly, regulates the second meeting if the quorum is not met, and makes resolutions pass by a majority of the votes present.
- Article 93Article 93 sets the quorum for an extraordinary general assembly across its three meetings, and requires two thirds of the votes present for resolutions and three quarters for capital, term, dissolution, merger, and split decisions.
- Article 94Article 94 provides that a joint stock company's general assembly resolution takes effect from its issuance unless the Companies Law, the bylaws, or the resolution itself provides another time or specific conditions.
- Article 95Article 95 refers the method of voting in a shareholders' assembly to the company's bylaws and bars board members from voting on business and contracts in which they have an interest or a conflict of interest.
- Article 96Article 96 regulates preparing the general assembly agenda, holders of 10% of voting shares' right to add items, and each shareholder's right to discuss and put questions to the board and the auditor.
- Article 97Article 97 requires minutes of every shareholders' assembly meeting recording attendance, shares, votes, resolutions, and a summary of the discussions, entered in a special register signed by the chair, secretary, and vote collectors.
- Article 98Article 98 gives the sole founder or owner of all a joint stock company's shares the powers of the shareholders' assemblies, so that their resolutions are issued in writing without calling an assembly and recorded in the special register.
- Article 99A shareholder who objected to a general assembly resolution that breaches the Law or the articles of association, or who was absent with an acceptable excuse, may ask the court to annul it within 90 days, provided they remain a shareholder throughout the case.
- Article 100The article allows the articles of association of an unlisted joint stock company to provide for general assembly resolutions to be passed by circulation without a meeting, with certain resolutions excluded and conditions for validity.
- Article 101The article sets the percentages needed to pass general assembly resolutions by circulation in unlisted joint stock companies: a majority for ordinary resolutions and 75% for extraordinary ones, recorded in minutes and the special register.
- Article 102The article allows shareholders holding 5% of the capital to ask the competent court to inspect the company where the conduct of the board or auditor raises suspicion, and sets out the court's powers if the complaint is proven.
- Article 103The article provides that shares of a joint stock company are registered and indivisible vis-à-vis the company, and regulates joint ownership, nominal value, splitting and consolidation, and share ownership certificates for unlisted companies.
- Article 104The article provides that subscribing to or owning shares means the shareholder accepts the articles of association and is bound by shareholders' assembly resolutions passed in accordance with the Law, even if absent or opposed.
- Article 105The article provides that shares are issued against cash or in-kind contributions, requires at least a quarter of the nominal value of cash shares to be paid with the rest within five years, and full payment for in-kind shares before issue.
- Article 106The article prohibits issuing shares below their nominal value and allows issue above it if the articles of association provide or the extraordinary assembly approves, with the difference placed in a separate item within shareholders' equity.
- Article 107The article lists the rights a shareholder has by virtue of a share, such as disposing of it, attending assemblies, voting, profits, inspection, bringing actions and a share on liquidation, subject to the conditions of the Law and the articles of association.
- Article 108The article sets out the types of shares that may be issued, namely ordinary, preferred and redeemable, allows classes with different rights or restrictions in the articles of association, and leaves the rules to the regulations.
- Article 109The article allows one type or class of shares to be converted into another if the articles of association provide and the extraordinary assembly approves, except for automatic conversion, and requires unanimity to convert into redeemable shares.
- Article 110The article requires the approval of a special assembly of those affected and of the extraordinary assembly to amend or cancel the rights of a class of shares, convert them, or issue shares that affect another class.
- Article 111The article allows the Authority to set restrictions on trading the shares of companies seeking listing, and the articles of association to restrict share trading, such as a right to request redemption, provided they do not amount to an absolute ban.
- Article 112The article requires an unlisted joint stock company to keep a register of shareholders with their details and shares, kept in the Kingdom, and to give the commercial register its data and any amendments within 15 days.
- Article 113The article allows the articles of association, with the approval of 90% of voting shares, to let the majority compel the minority to sell to a good-faith buyer, and the minority to require the majority to secure the sale of its shares on the same terms.
- Article 114The article allows a company to buy or take its own shares in pledge if its articles of association permit, without voting rights, and allows shares to be pledged, with the pledgee entitled to profits and rights but not to attend or vote.
- Article 115The article allows the board to sell the shares of a shareholder who has not paid the balance after notifying them, suspends their rights until sale or payment, and regulates the company recovering its dues and issuing a certificate to the buyer.
- Article 116The article prevents the company from demanding that a shareholder pay more than they committed to when the share was issued, even if the articles of association provide otherwise.
- Article 117The article allows a joint stock company to issue tradable debt instruments or financing sukuk under the Capital Market Law, and requires an extraordinary assembly resolution setting a maximum for those convertible into shares.
- Article 118The article allows a company to convert debt instruments or financing sukuk into shares under the Capital Market Law, provided the holder approves, whether in advance in the issue terms or by a later agreement.
- Article 119The article allows any interested party to ask the competent judicial authority to annul an act that breaches Articles 117 and 118, in addition to compensating holders of debt instruments or financing sukuk for the harm.
- Article 120The article provides that shareholders' assembly resolutions apply to holders of debt instruments and financing sukuk, but their rights may not be amended without their approval in a special assembly of their own convened under Article 89.
- Article 121The article requires the board of a joint-stock company to prepare the financial statements and an annual activity report and give them to the auditor at least 45 days before the annual general assembly.
- Article 122The article requires the chairman of the board to provide shareholders with the financial statements, the board's report and the auditor's report at least 21 days before the annual ordinary general assembly, and to file them as the regulations provide.
- Article 123The article allows the articles of association to set aside a percentage of net profits as a reserve, and allows the ordinary general assembly to create other reserves and to deduct amounts for social purposes for the company's employees.
- Article 124The article says who decides how a joint-stock company's reserves are used, and allows the ordinary general assembly to use retained profits and distributable reserves to pay the unpaid balance of share value.
- Article 125The article gives the general assembly the power to set the percentage of profits distributed after deducting reserves, and provides that profits belong to shareholders registered at the end of the entitlement day.
- Article 126The article sets out four ways to increase a joint-stock company's capital, all by issuing new shares: for cash or in-kind contributions, for debts, by incorporating reserves, or for debt instruments and sukuk.
- Article 127The article allows the extraordinary general assembly to increase the issued or authorized capital on condition that the issued capital is fully paid, and to allocate increase shares to employees without shareholders' priority right.
- Article 128The article gives a shareholder who owns shares when the capital increase decision is issued priority to subscribe for the new shares issued for cash contributions, and requires that they be notified of it and of the subscription terms.
- Article 129The article allows the extraordinary general assembly, if the articles of association so provide, to suspend shareholders' priority right in cash subscriptions or to grant it to others in the company's interest.
- Article 130The article allows a shareholder in a joint-stock company to sell the priority right to subscribe, or to waive it, for consideration or free of charge, as the regulations provide.
- Article 131The article explains how new shares are distributed: first to holders of priority rights in proportion to their rights, then the remainder to those who requested more, and then what is left is offered to others.
- Article 132If losses reach half of the issued capital, the board of a joint-stock company must disclose this within 60 days and call the extraordinary general assembly within 180 days to decide whether to continue or dissolve.
- Article 133The article sets out four ways to reduce a joint-stock company's capital: cancelling shares, reducing nominal value by cancelling a part equal to the loss or by refund or release, or buying shares and cancelling them.
- Article 134The article allows the extraordinary general assembly to reduce capital if it exceeds the company's needs or the company has suffered losses, after a statement from the board and a report from the auditor.
- Article 135When capital is reduced because it exceeds the company's needs, creditors must be invited to object 45 days before the assembly, and the company must pay an objecting creditor's due debt or secure a debt not yet due.
- Article 136The article requires equality between shareholders holding shares of the same type and class when a joint-stock company's capital is reduced.
- Article 137The article governs capital reduction by the company buying its own shares to cancel them: inviting shareholders to offer their shares, reducing requests proportionally, and setting the price at fair value or under the market law.
الباب الخامس: شركة المساهمة المبسطةArticles 138–155
- Article 138The article provides that the joint-stock company provisions apply to the simplified joint-stock company where there is no special provision, except for listed articles, and gives its shareholders freedom to organize its structure in the articles of association.
- Article 139The article requires the articles of association to state the issued and paid-up capital of a simplified joint-stock company, allows an authorized capital, and does not apply to it the minimum capital set for a joint-stock company.
- Article 140The article sets out what the articles of association of a simplified joint-stock company must contain and the documents attached to the formation application.
- Article 141The article exempts in-kind contributions in a simplified joint-stock company from accredited valuation if they do not exceed half of the capital, requires it if they do, and makes founders or shareholders liable if valuation is not done or is departed from.
- Article 142The article leaves the management of a simplified joint-stock company to its articles of association, gives management the widest powers, and binds the company by acts done in its name even beyond its authority, except against bad-faith dealers or those who know of the excess.
- Article 143The article makes the provisions on the liability of the board of a joint-stock company apply to the chairman, manager or board of directors of a simplified joint-stock company, as the case may be.
- Article 144The article makes the rule of Article 72 of the Companies Law apply to the chairman, manager or board of directors of a simplified joint-stock company, as the case may be.
- Article 145The article leaves it to the articles of association of a simplified joint-stock company to set the matters for shareholder decision, the quorum and unanimity, while requiring that certain core decisions, such as capital increase, dissolution and profit distribution, be taken by the shareholders.
- Article 146The article governs calling shareholders' meetings in a simplified joint-stock company: who calls, the 5-day notice, the means of notification, the right to information, the place of the meeting, and meeting without a call when all shares are represented.
- Article 147The article requires the management of a simplified joint-stock company to prepare the financial statements and an annual report and present them, with the auditor's report, to the shareholders within 6 months of the end of the financial year, and to file them as the regulations provide.
- Article 148The article requires the deliberations and decisions of a simplified joint-stock company's shareholders to be recorded in minutes in a special register, and the decisions set by the regulations to be registered in the commercial register within 15 days.
- Article 149The article allows, if the articles of association so provide, the shareholders' decisions of a simplified joint-stock company to be issued by circulation without a meeting, explains how the proposed decision is sent, and leaves the quorum to the articles of association.
- Article 150The article allows a simplified joint-stock company to have a single person, whose liability is limited to the money allocated as capital and who exercises the shareholders' powers through written decisions entered in a special register.
- Article 151The article allows a company's articles of association to restrict disposal of shares, such as a ban for up to 10 years or a requirement of prior approval, and makes any disposal in breach of the restrictions void.
- Article 152The article allows a company's articles of association to set conditions for requiring a shareholder to give up their shares at fair value, and to suspend their non-financial rights until they do so.
- Article 153The article allows a company's articles of association to provide for settling disputes between shareholders, or between them and the company's management, by arbitration or alternative means, except criminal acts.
- Article 154The article requires the unanimity of the shareholders to include the provisions of Articles 151, 152 and 153 in a company's articles of association, and for any amendment to any of them.
- Article 155The article refers to the regulations to set the provisions needed to implement what is in this Part of the Companies Law.
الباب السادس: الشركة ذات المسؤولية المحدودةArticles 156–184
- Article 156The article defines the limited liability company as a company with a separate financial liability formed by one or more persons, in which a partner is liable for its debts only to the extent of their share in the capital.
- Article 157The article regulates a limited liability company owned by one person: their powers, documenting their decisions, appointing a manager, and the company having articles of association in place of a memorandum of association.
- Article 158The article sets out the details that must be stated in the memorandum of association of a limited liability company, and the documents attached to it when applying for formation.
- Article 159For valuing in-kind shares in a limited liability company, the article refers to the provisions of Article 141 of the Companies Law.
- Article 160The article provides that a limited liability company is managed by one or more managers appointed by the partners in the memorandum of association or a separate contract, and that a board of managers may be formed.
- Article 161The article provides that the memorandum of association or a partners' resolution sets how the company is managed and the majority needed for decisions where there are several managers or a board of managers.
- Article 162The article makes the manager the company's representative before the courts, arbitration and third parties, with power to delegate, and provides that resolutions appointing or changing the manager do not bind third parties until registered in the commercial register.
- Article 163The article requires the partners to appoint a new manager within 15 days of learning that the sole manager's position is vacant, and allows the auditor or any partner to call the general assembly for this.
- Article 164The article allows the partners to remove the manager and appoint a successor, without the partner-manager voting on their own removal, and allows holders of a quarter of the capital to ask the competent court to remove them.
- Article 165The article regulates the partners' general assembly in a limited liability company: its composition, annual meeting, who may call it, notice period, recording its decisions and remote meetings.
- Article 166The article regulates how partners' decisions are made, in the general assembly or by circulation, how they are sent, and requires approval of more than half the capital unless the contract requires a greater majority.
- Article 167The article requires the manager to prepare the financial statements and an annual activity report, make them available to the auditor 45 days before the annual meeting, and give them to the partners 21 days before it.
- Article 168The article sets out the items that must be on the agenda of the annual meeting of the partners' general assembly, including the financial statements, the manager's and auditor's reports and profit distribution.
- Article 169The article prevents the general assembly from deliberating outside the agenda except for urgent facts, and gives a partner the right to request that matters be included, to discuss topics and to question the manager.
- Article 170The article allows a partner who objected in writing to ask for annulment of a general assembly decision that breaches the Law or the memorandum of association, within 90 days of it, provided they remain a partner throughout the case.
- Article 171The article sets out a partner's rights to vote according to their shares, appoint a proxy and inspect the company's records twice a year, and obliges anyone who obtains information to keep it confidential.
- Article 172The article allows the memorandum of association to be amended, and capital increased or reduced, with the approval of three quarters of the capital, and gives partners priority in new cash shares.
- Article 173The article allows a limited liability company's memorandum of association to provide for settling disputes between partners, or between the company and its managers, by arbitration or alternative means, except criminal acts.
- Article 174The article requires the capital to be stated in the memorandum of association and divided into equal shares that are indivisible and non-negotiable, and regulates the case of a share owned by several persons.
- Article 175The article provides that shares carry equal rights in net profits and liquidation surplus unless the memorandum of association says otherwise, and that the general assembly sets the distribution percentage and the due date.
- Article 176The article regulates reducing a limited liability company's capital because it exceeds the company's needs or because of losses, the statements required, and registering the decision with the commercial register within 15 days.
- Article 177The article allows the memorandum of association to set aside a percentage of net profits for a reserve, and lets the partners at the annual meeting form reserves and deduct amounts for social purposes for the company's employees.
- Article 178The article regulates a partner assigning their share to partners or others, and the other partners' or the company's right of redemption within 30 days, excluding inheritance, wills and court judgments.
- Article 179The article allows a limited liability company to issue tradable debt instruments or financing sukuk in accordance with the Capital Market Law, with the approval of the partners in the manner for amending the memorandum of association.
- Article 180The article allows a company to buy or take its own shares in pledge if its memorandum of association so provides, without votes, and allows shares to be pledged, with the pledgee entitled to the profits.
- Article 181The article allows a company's formation contract, with the approval of partners holding at least 90% of the capital, to let the majority compel the minority to sell with them, or let the minority compel the majority to ensure the minority's shares are sold.
- Article 182The article requires the company's manager, once losses reach half the capital, to call the partners' general assembly within 60 days of learning of it to consider continuing the company or dissolving it.
- Article 183The article regulates extending the term of a fixed-term company by a resolution of partners holding half the capital, automatic extension if it keeps operating, a reluctant partner's right to exit, and the right of third parties to object.
- Article 184The article provides that a limited liability company does not terminate on the death, interdiction, bankruptcy, insolvency or withdrawal of a partner, unless its formation contract so provides.
الباب السابع: الشركة غير الربحيةArticles 185–196
- Article 185The article defines public and private non-profit companies, sets the forms they may take, prohibits offering their shares for public subscription, and applies the rules of their form where this chapter is silent.
- Article 186The article requires the public non-profit company's articles of association to state its public non-profit fields, and allows a non-profit company to collect returns and carry on a lawful activity whose profits are spent on those fields.
- Article 187The article requires the Ministry's approval for an amendment to a public non-profit company's articles of association to take effect if it covers rules on disposing of assets, the board's powers, or the company's outlets and fields.
- Article 188The article makes every partner or shareholder in a non-profit company a member, lets the formation documents regulate membership classes, powers, fees and certificates, and lets the Ministry regulate aspects of membership.
- Article 189The article provides that each membership class in a non-profit company gives rise to equal rights and obligations, and that a member holds the rights of his membership, including taking part in assembly deliberations and inspecting records.
- Article 190The article sets out how membership in a non-profit company ends: death or loss of legal personality, assignment in a private company, cancellation, expiry of the term without renewal, and the company's termination.
- Article 191The article allows a member of a non-profit company to request the end of his membership, provided he compensates the company if the ending results in a breach of his obligations toward it.
- Article 192The article requires a non-profit company to record its members' data in a special register and to provide the commercial register with that data and any amendment to it within 15 days of registration or the amendment.
- Article 193The article allows the public non-profit company to accept gifts, bequests and endowments and to manage and invest them under their donors' conditions, and to ask the competent judicial authority to amend the conditions if the donor's consent cannot be obtained.
- Article 194The article requires a non-profit company to spend its profits on its fields, bars distributing them to members, managers and employees except within those fields, and allows reasonable remuneration and a suit for recovery.
- Article 195The article allows government entities, public bodies and institutions, universities and other public legal persons permitted to do so to form non-profit companies, and allows public sector employees to form public non-profit companies.
- Article 196The article tasks the Zakat, Tax and Customs Authority, in coordination with the Ministry, with setting the rules for non-profit companies not being subject to zakat and being exempt from taxes, and for deducting donations made to them from the tax base.
الباب الثامن: الشركة المهنيةArticles 197–215
- Article 197The article defines the professional company as a company formed by one or more persons licensed in one or more liberal professions, or by them together with others, for the purpose of practicing those professions.
- Article 198The article provides that a professional company takes any of the company forms set out in Article 4 of the Companies Law.
- Article 199The article applies the rules of its form to the professional company where there is no special provision, and provides that a partner or shareholder in it does not acquire the status of merchant by virtue of the partnership.
- Article 200The article sets the ways to form a professional company: between licensed persons, by one person, across several professions or with a non-Saudi professional company, and participation by unlicensed persons under the regulations.
- Article 201The article bars a partner or shareholder who practices the profession in a professional company from taking part in another professional company practicing the same profession, unless the formation contract or articles of association provide for it.
- Article 202The article provides that a professional company is formed under the formation procedures prescribed for its form, and that partners may dissolve it only after announcement and written notice to everyone dealing with it, under the regulations.
- Article 203The article limits practice of the profession in a professional company to licensed partners or shareholders, and allows it to engage other licensed persons under its supervision and responsibility.
- Article 204The article limits a professional company's activity to its profession or professions and bars it from commercial business, while allowing it to own real estate and invest to serve its purposes under the regulations' rules.
- Article 205The article subjects the professional company, in practicing its profession, to the supervision of the body concerned with that profession, binds it to that body's laws and regulations, and gives the body the right to inspect its records within its jurisdiction.
- Article 206The article bars a partner or shareholder in a professional company not owned by one person from practicing his profession outside it except with the partners' written approval or the general assembly's approval; otherwise his fees belong to the company.
- Article 207The article regulates managing a professional company by one or more managers who are partners or others, requires a sole manager to be a licensed partner, and has a professional joint stock company managed by a board under the regulations.
- Article 208The article bars the authority of the manager or board of a professional company owned by more than one person from including anything that impairs the independence of partners or shareholders in practicing their liberal professions.
- Article 209The article makes each partner or shareholder in a professional company personally liable for his professional errors toward the company and the other partners, and makes the company liable to compensate third parties for its partners' and staff's professional errors.
- Article 210The article allows the Minister, by decision and after coordinating with the body supervising the profession, to tie a professional company's practice of certain activities or dealings to obtaining insurance coverage for professional errors.
- Article 211The article explains the effect on a partner or shareholder in a professional company of temporarily or permanently losing their licence to practice a liberal profession, on their work in it and on the company's continued practice.
- Article 212The article states what happens to the share of a deceased partner or shareholder in a professional company according to its form, and their heirs' rights in it.
- Article 213The article regulates shares or stock that pass to the heirs of a deceased partner or shareholder in a professional company, and the right of an heir licensed to practice the profession to do so through the company.
- Article 214The article requires the memorandum of association of a professional general partnership and a professional simple limited partnership to state the consequences of a general partner being interdicted, insolvent or subject to liquidation proceedings.
- Article 215The article allows the partners or shareholders to convert a professional company into another form of company listed in Article 4, after meeting the conditions of the Law and the regulations.
الباب التاسع: الشركة القابضة والشركة التابعةArticles 216–219
- Article 216The article defines the holding company as a joint stock, simplified joint stock or limited liability company that forms companies or owns shares or stock in existing companies that become its subsidiaries.
- Article 217The article sets out the four cases in which a company is a subsidiary of a holding company, all based on the holding company's control over the company's decisions or management.
- Article 218The article bars a subsidiary from owning shares or stakes in its holding company and deals with holdings acquired before the subsidiary relationship and the exceptions to the bar.
- Article 219The article refers to the regulations to set the provisions needed to implement the part on the holding company and the subsidiary company.
الباب العاشر: تحول الشركات واندماجها وتقسيمهاArticles 220–234
- Article 220The article regulates converting a company from one form to another, the conditions for converting to a simplified joint stock or joint stock company, and transferring sole proprietorship assets to companies.
- Article 221The article states when a private non-profit company may convert to another form and on what conditions, and permits any company to convert to a non-profit company by unanimous consent of the partners.
- Article 222The article gives a partner or shareholder who objects to a company's conversion resolution the right to withdraw by written request within 15 days, with payment of the value of their stakes or shares.
- Article 223The article provides that a company's conversion does not create a new legal person, so the company keeps its rights and remains liable for its pre-conversion obligations.
- Article 224The article provides that converting a general or simple limited partnership does not discharge the partners with joint liability from pre-conversion debts, unless the creditors expressly accept or none objects within 30 days.
- Article 225The article sets out the two forms of company merger, what a merger proposal must contain and how it is approved, and the conditions for a valid merger and the consideration in it.
- Article 226The article refers to the regulations to regulate a company's merger into a company that wholly owns it and the merger of companies wholly owned by the same partners, and allows them to be exempted from some provisions of the part.
- Article 227The article requires the party companies to announce the merger at least 30 days ahead, and gives creditors of the merged company the right to object and to resort to the competent judicial authority.
- Article 228The article fixes the date a merger decision takes effect as the date of registration in the commercial register, which differs between an absorption and a consolidation.
- Article 229The article provides that when the merger decision takes effect, all of the merged company's rights, obligations, assets and contracts pass to the absorbing or newly formed company, which is regarded as its successor.
- Article 230The article regulates shareholders' rights and obligations when a person or a group acting together reaches 90% of the voting shares in a joint stock company, including the mandatory offer and objecting to the price.
- Article 231The article permits a company to be divided into two or more companies even if it is in liquidation, and the resulting companies may take any form of company listed in Article 4.
- Article 232The article sets out how a company division decision is issued and the information it must contain, such as each partner's share and how assets, rights and obligations are distributed.
- Article 233The article makes a company arising from a division the successor of the original company to the extent of what passed to it, while creditors of the original company may claim against all the resulting companies jointly.
- Article 234The article refers to the regulations to set the controls for dividing a company, including its procedures, arrangements and conditions, according to the company's form.
الباب الحادي عشر: الشركات الأجنبيةArticles 235–241
- Article 235The article applies the Companies Law to foreign companies carrying on activity in the Kingdom, except the formation provisions and without prejudice to special agreements and applicable laws.
- Article 236The article states that a foreign company carries on its activity inside the Kingdom through a branch, a representative office or any other form, in accordance with the Foreign Investment Law and the relevant legal provisions.
- Article 237The article requires every branch or representative office of a foreign company to put on its papers, documents and publications its address in the Kingdom and the company's full name, address and head office.
- Article 238The article regulates the finances of a foreign company's branch: stating its fiscal year in the registration application, preparing and filing its financial statements with the auditor's report within 6 months, and appointing an auditor.
- Article 239The article treats a foreign company's branch or representative office in the Kingdom as its domicile for its activity inside the Kingdom, and applies all the laws in force to it.
- Article 240The article makes a foreign company and those who carried on its activity jointly liable if it operated before completing licensing and commercial register registration or went beyond what it was licensed for.
- Article 241A foreign company present in the Kingdom to carry out specific work within a set period is registered provisionally in the commercial register until that work ends, and may continue after meeting the legal requirements.
الباب الثاني عشر: انقضاء الشركة وتصفيتهاArticles 242–259
- Article 242The article requires managers or board members to prepare a statement confirming that the company's assets suffice to pay its debts before a dissolution decision, and bars dissolution if the assets are insufficient or the company is in financial distress.
- Article 243The article sets three general grounds on which a company ends: expiry of its fixed term unless extended, agreement of the partners or shareholders to dissolve it, and a final court judgment dissolving it or declaring it void.
- Article 244The article provides that an ended company enters liquidation while keeping its legal personality as far as needed, requires a statement on the sufficiency of assets, and refers a company unable to pay its debts to the Bankruptcy Law.
- Article 245The article provides that a company is liquidated as its articles of association or bylaws provide or as the partners agree, and if there is no such provision, in accordance with the provisions of the Law.
- Article 246The article ends the authority of the manager or board when the company ends, while they remain in management until a liquidator is appointed, and keeps the company's assemblies and the partners' right to inspect during liquidation.
- Article 247The article permits liquidation by one or more liquidators from among the partners or others, and limits its period to 3 years, extendable only by court order.
- Article 248The article regulates appointing the liquidator by a partners' decision within 60 days of the ending, or by a court decision if that is not possible or the company is dissolved by court, and requires verifying the assets and fixing his powers and fees.
- Article 249The article requires the liquidator to register and publish his appointment decision with the commercial register, and his appointment and the liquidation procedures may not be invoked against third parties except from the date of registration and publication.
- Article 250The article provides that the liquidator is removed in the way he was appointed, and allows the competent judicial authority to remove him at the request of partners, shareholders or creditors for acceptable reasons, with a replacement appointed.
- Article 251The article requires multiple liquidators to act together, and their acts are valid only by unanimity, unless the decision appointing them provides otherwise or the authority that appointed them permits it.
- Article 252The article specifies the liquidator's powers to represent the company and convert its assets into cash, restricts selling them in bulk or contributing them as a share, and bars new business except to complete earlier business.
- Article 253The article requires management to hand the company's records to the liquidator, requires the liquidator to inventory assets and obligations within 90 days, and to prepare financial statements and an annual report on the liquidation.
- Article 254The article requires the liquidator, if the company's assets prove insufficient to pay its debts, to notify the partners and creditors immediately and apply to open a liquidation procedure under the Bankruptcy Law.
- Article 255The article orders the payment of company debts first with priority for liquidation debts, then returning the value of stakes or shares, then distributing the surplus, and distributing any loss according to the prescribed proportion.
- Article 256The article provides that on liquidation a non-profit company's net assets go to the non-profit bodies named in its contract or by the donor, testator or founder of the endowment, and otherwise with the Ministry's approval to similar bodies.
- Article 257The article provides that liquidation ends when the authority that appointed the liquidator approves his detailed financial report, requires him to register and publish its end, and it is not effective against third parties until the registration is cancelled.
- Article 258The article makes the liquidator liable for compensating harm resulting from exceeding his powers or from his errors, with the liability personal or shared among liquidators if the decision was unanimous.
- Article 259The article provides that a claim against the liquidator is not heard after 5 years from the date the company's registration is cancelled with the commercial register, except in cases of forgery and fraud.
الباب الثالث عشر: العقوباتArticles 260–271
- Article 260The article punishes with up to 3 years in prison and a fine of up to SAR 5,000,000, or either, anyone who falsifies a company's financial data, uses its funds and powers against its interests, or a liquidator who abuses his role.
- Article 261The article punishes with up to 1 year in prison and a fine of up to SAR 1,000,000, or either, acts including buying votes, distributing profits in bad faith, disclosing secrets and overstating the value of stakes.
- Article 262The article punishes with a fine of up to SAR 500,000 administrative and regulatory violations, including obstructing assemblies, neglecting records and financial statements, and failing to register in the commercial register.
- Article 263The article requires taking into account the seriousness, circumstances and effects of the offense or violation when setting the penalty, and doubles the penalties for offenses under Articles 260 and 261 on repetition within 3 years.
- Article 264The article allows the competent judicial authority to take measures such as a warning, requiring correction and a ban from the board of a listed company, in addition to the penalties of Articles 260 and 261 or instead of them.
- Article 265The article makes the Public Prosecution the authority competent for investigation and prosecution of the offenses in Articles 260 and 261 of the Companies Law.
- Article 266The article makes the competent court the body that decides the Companies Law's cases and disputes, except that those concerning listed joint stock companies go to the Committee for the Resolution of Securities Disputes.
- Article 267The article establishes a committee in the Ministry to hear Article 262 violations for unlisted companies, with a right of grievance before the court within 30 days, and makes the Authority's board competent for listed companies.
- Article 268The article gives the employees charged with detecting the Companies Law's offenses and violations judicial-officer status and the right to seize records, and allows the Minister and the Authority's board to regulate their work and set rewards for detection.
- Article 269The article provides that applying the Companies Law's penalties does not prejudice the right of anyone harmed to claim compensation from whoever caused the harm by committing the offenses and violations provided for in the Law.
- Article 270The article gives the competent authority the right to supervise the application of the Law and the company's contract, including inspection, examining accounts, requesting documents, and sending a representative to attend general assemblies.
- Article 271The article requires all officials in the company to give the Ministry's representatives, and the Authority's for listed or soon-to-be-listed joint stock companies, access to its records and documents and to provide information and clarifications.
الباب الرابع عشر: أحكام ختاميةArticles 272–281
- Article 272If forming a company established by the State or a public legal person, or in which they participate, requires an exception from the Law, the formation request and the exception, with reasons, are submitted to the Council of Ministers.
- Article 273The article provides that the provisions of the Companies Law apply to stakes and shares owned by an endowment (waqf).
- Article 274The article sets the Authority's competence to supervise listed joint stock companies, the governance regulations, the beneficial owner information rules, and the Minister's and the Authority's board's power to issue implementing decisions.
- Article 275The article allows the competent authority to use public or private bodies to perform its tasks under the Law and to assign some of these tasks to them.
- Article 276The article authorizes the competent authority to regulate reporting violations of the Law and the regulations, including setting financial rewards for informants, the controls for paying them and procedures to protect them.
- Article 277The article requires the Minister and the Authority's board to issue the Law's regulations within 180 days of its publication, sets their subjects, and allows the Law's and regulations' procedures to be electronic.
- Article 278The article allows the competent authority to propose rules that encourage companies to engage in social responsibility and the stages of applying them, to be issued by Council of Ministers resolution.
- Article 279The article refers to the regulations the setting of the fees for the services the competent authority provides in implementing the Companies Law.
- Article 280The article provides that the Companies Law replaces the Companies Law of 1437 AH and the Professional Companies Law of 1441 AH, and repeals any provision that conflicts with it.
- Article 281The article provides that the Companies Law takes effect 180 days after its publication in the Official Gazette.
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