Article 130 of the Saudi Companies Law

المادة 130 من نظام الشركات · الفرع الأول: زيادة رأس المال

The 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.

Official text (Arabic)

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

للمساهم في شركة المساهمة بيع حق الأولوية أو التنازل عنه بمقابل مادي أو دون مقابل وفقًا لما تحدده اللوائح.

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 130 explained in plain English

The priority right to subscribe in a capital increase is not merely an opportunity to use or leave; this article makes it a right that can be disposed of.

What can the shareholder do?

Sell the priority right for a financial consideration.
Or waive it for a financial consideration or free of charge.

The restriction: this is done as the regulations provide. The article does not set out the procedures or rules for sale or waiver but refers them to the regulations, so they must be consulted to know how it is done.

Practical effect: a shareholder who does not want to, or cannot, pay new amounts to subscribe does not necessarily lose the value of the right; they can transfer it to someone else and benefit from the consideration. The person who buys the right becomes a holder of priority rights.

This article is connected to Article 129, which allows the extraordinary general assembly to suspend the priority right if the articles of association so provide, and to Article 131, which explains how new shares are distributed to holders of priority rights who requested to subscribe. For the legal procedures in a particular case, you can consult a lawyer specializing in companies and securities.

Practical example

Mona owns shares in a joint-stock company that has decided to increase its capital in cash, so she has a priority right to subscribe. Since she does not want to put in new funds, she sells her right to another investor for a financial consideration, following the procedures set by the regulations, and the investor becomes the holder of the priority to subscribe in her place.

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 130 of Companies Law?

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