Article 159 of the Saudi Companies Law
المادة 159 من نظام الشركات · الفصل الثاني: تأسيس الشركة ذات المسؤولية المحدودة
For valuing in-kind shares in a limited liability company, the article refers to the provisions of Article 141 of the Companies Law.
Official text (Arabic)
This article has not been amended since the law was issued.
يتبع في تقييم الحصص العينية الأحكام المنصوص عليها في المادة (الحادية والأربعين بعد المائة) من النظام.
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 159 explained in plain English
An in-kind share is what a partner contributes to the company's capital other than cash, such as equipment, goods or other property. Because the value of these shares needs to be assessed, this article sets out the reference for valuing them.
The text of the article is short: it refers to the provisions set out in Article 141 of the Law, which means that the valuation of in-kind shares in a limited liability company is subject to those provisions. The text of the article itself does not state the valuation details, so Article 141 should be consulted to learn them.
This article is linked to Article 158, which requires that, when applying for formation, there be attached to the memorandum of association a statement or report prepared by one or more accredited valuers setting out the fair value of any in-kind shares, with an acknowledgment from the other founders that they approve the consideration set for them. Article 158 also requires the memorandum of association to state the capital and its distribution among the partners.
The management of the company is regulated by other provisions, including Article 160, which provides that the company is managed by one or more managers, from among the partners or others, appointed by the partners.
Because the valuation of an in-kind share directly affects each partner's percentage of the capital, partners contributing in-kind shares should consult a lawyer who specializes in companies and commercial disputes.
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 159 of the Saudi Companies Law
What is the reference for valuing in-kind shares in a limited liability company?
The article refers to the provisions set out in Article 141 of the Companies Law.
Is a report from an accredited valuer required for an in-kind share on formation?
Article 158 requires that a statement or report from one or more accredited valuers setting out the fair value of any in-kind shares be attached to the memorandum of association. However, Article 141, to which this article refers, does not require valuation by an accredited valuer if the total value of the in-kind shares does not exceed half of the capital, unless the founders agree otherwise, and it requires it if the total exceeds half.
Articles this article refers to
More articles on Limited Liability Company
- Article 25
The 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.
1- تنتقل ملكية الحصص في شركة التضامن وشركة التوصية البسيطة والشركة ذات المسؤولية المحدودة بالقيد لدى السجل التجاري، ولا يُعتد بنقل ملكية الحصة في مواجهة الشركة
- Article 156
The 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.
الشركة ذات المسؤولية المحدودة: هي شركة يؤسسها شخص واحد أو أكثر من ذوي الصفة الطبيعية أو الاعتبارية، وتعد ذمتها مستقلة عن الذمة المالية لكل شريك فيها أو المالك ل
- Article 157
The 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.
1- في حال تأسيس الشركة ذات المسؤولية المحدودة من شخص واحد، أو إذا آلت جميع حصصها إلى شخص واحد، يترتب ما يأتي: أ- أن تكون لهذا الشخص صلاحيات وسلطات المدير ومجلس
- Article 158
The 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.
1- يجب أن يشتمل عقد تأسيس الشركة ذات المسؤولية المحدودة بصفة خاصة على البيانات الآتية: أ- أسماء الشركاء، وبياناتهم. ب- اسم الشركة. ج- المركز الرئيس للشركة. د- غ
- Article 160
The 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.
يدير الشركة مدير أو أكثر من الشركاء أو من غيرهم، ويعين الشركاء المدير أو المديرين في عقد تأسيس الشركة أو في عقد مستقل، لمدة محددة أو غير محددة. ويجوز بقرار من ا
- Article 161
The 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.
يحدد عقد تأسيس الشركة أو قرار الشركاء طريقة إدارة الشركة، والأغلبية اللازمة لصدور القرارات عند تعيين أكثر من مدير أو تكوين مجلس مديرين.
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.