Skip to content
Qanoon
Sign in

Article 115 of the Saudi Companies Law

المادة 115 من نظام الشركات · الفرع الأول: الأسهم

The 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.

Official text (Arabic)

This article has not been amended since the law was issued.

1- يلتزم المساهم بدفع المتبقي من قيمة السهم في المواعيد المحددة لذلك، وإذا تخلف عن الوفاء في الموعد المحدد، جاز لمجلس الإدارة -بعد إعلامه بالطرق المقررة في نظام الشركة الأساس أو إبلاغه بخطاب مسجل أو بأي وسيلة من وسائل التقنية الحديثة- بيع السهم في المزاد العلني أو السوق المالية، بحسب الأحوال. ويجوز أن ينص نظام الشركة الأساس على أن يكون للمساهمين الآخرين أولوية في شراء أسهم المساهم المتخلف عن الدفع.

2- تستوفي الشركة من حصيلة البيع المبالغ المستحقة لها وترد الباقي إلى صاحب السهم. وإذا لم تكفِ حصيلة البيع للوفاء بهذه المبالغ، جاز للشركة أن تستوفي الباقي من جميع أموال المساهم.

3- يُعلق نفاذ الحقوق المتصلة بالأسهم المتخلّف عن الوفاء بقيمتها عند انقضاء الموعد المحدد لها إلى حين بيعها أو دفع المستحق منها وفقًا لحكم الفقرة (1) من هذه المادة، وتشمل حق الحصول على نصيب من صافي الأرباح التي يتقرر توزيعها وحق حضور الجمعيات والتصويت على قراراتها. ومع ذلك، يجوز للمساهم المتخلف عن الدفع إلى يوم البيع دفع القيمة المستحقة عليه مضافًا إليها المصروفات التي أنفقتها الشركة في هذا الشأن، وفي هذه الحالة يكون للمساهم الحق في طلب الحصول على الأرباح التي تقرر توزيعها.

4- تلغي الشركة شهادة السهم المبيع وفقًا لأحكام هذه المادة، وتعطي المشتري شهادة جديدة بالسهم تحمل الرقم ذاته، وتؤشر في سجل المساهمين بوقوع البيع مع إدراج البيانات اللازمة للمالك الجديد.

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 115 explained in plain English

This article deals with the case of a shareholder who has not paid the balance of the value of their shares by the due date.

1- The obligation and the consequence

  • The shareholder must pay the remaining value of the share by the specified dates.
  • If they default, the board of directors may sell the share at public auction or on the capital market, as the case may be.
  • The sale is preceded by notifying the shareholder by the methods set out in the articles of association, by registered letter, or by any modern technological means.
  • The articles of association may provide for priority for the other shareholders to buy these shares.

2- Sale proceeds

The company takes from the proceeds the amounts due to it and returns the rest to the owner of the share. If the proceeds are not enough, the company may recover the remainder from all of the shareholder's assets.

3- Suspension of rights

  • When the specified date passes, the effect of the rights attached to these shares is suspended until they are sold or the amount due is paid, including the right to a share of profits decided for distribution and the right to attend assemblies and vote.
  • The shareholder may, up to the day of the sale, pay the value due plus the expenses the company has incurred, and in that case is entitled to claim the profits that were decided for distribution.

4- After the sale

The company cancels the certificate of the share sold and gives the buyer a new certificate bearing the same number, and notes in the register of shareholders that the sale has taken place together with the new owner's details.

Article 116 adds that the company may not demand more from a shareholder than they committed to when the share was issued. A person who receives a notice of sale of their shares should promptly consult a lawyer who specializes in companies and commercial disputes.

Practical example

Nasser subscribed to shares in a joint stock company in Riyadh and paid a quarter of their value. When the date for paying the balance arrived, he did not pay. The board notified him by registered letter and then decided to sell his shares at public auction. The day before the sale, Nasser paid the amount due together with the expenses the company had incurred, so the sale was halted and he became entitled to claim the profits that had been decided for distribution.

Translated from our Arabic explanation with machine assistance. For guidance only; it does not replace advice from a lawyer on your situation.

How we write and review content

A question about Article 115 of Companies Law?

Describe what happened and specialist lawyers answer. You can write in English.

  • Completely free
  • Lawyers from the directory answer
  • Your name stays hidden
Ask a lawyer for free

Commercial & Corporate Law lawyers: ask a specialist about your case

Describe your situation briefly and we'll suggest a lawyer who specialises in this law

Commercial & Corporate Law lawyers

Lawyers who handle this kind of case

See all lawyers

Frequently asked questions about Article 115 of the Saudi Companies Law

What happens if I don't pay the balance of my shares' value on time?

After notifying you, the board of directors may sell the shares at public auction or on the capital market, and your rights attached to them are suspended until the sale or payment.

Can I stop the sale of my shares after being late?

Up to the day of the sale, the shareholder may pay the value due plus the expenses the company has incurred.

What if the proceeds from selling the shares don't cover the amount due?

The company may recover the remainder from all of the shareholder's assets.

Can a defaulting shareholder attend the general assembly?

No. The right to attend assemblies and vote is suspended until the shares are sold or the amount due is paid.

More articles on Shares and Capital Increase

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.