Article 160 of the Saudi Companies Law

المادة 160 من نظام الشركات · الفصل الثالث: إدارة الشركة ذات المسؤولية المحدودة

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.

Official text (Arabic)

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

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 الشركاء تكوين مجلس مديرين إذا تعددوا.

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 160 explained in plain English

This article regulates how the manager of a limited liability company is appointed, and contains the following provisions:

Number of managers: the company is managed by one or more managers.
Who may be a manager: the manager may be one of the partners or someone else; they need not be a partner.
Who appoints them: the partners appoint the manager or managers.
The instrument of appointment: the appointment is made in the company's memorandum of association or in a separate contract.
Duration of appointment: the appointment may be for a specified or an unspecified period.
Board of managers: if there are several managers, a board of managers may be formed by a resolution of the partners.

This flexibility lets the partners choose the management model that suits the size of their company: they may be content with a single manager in a small company, or form a board of managers in a larger one.

Article 161 complements this provision, as it provides that the memorandum of association or a resolution of the partners sets how the company is managed and the majority needed for decisions where more than one manager is appointed or a board of managers is formed. To draft the management provisions of the memorandum of association, it is possible to consult a lawyer who specializes in companies and commercial disputes.

Practical example

Three partners formed a contracting company in Riyadh and decided to appoint an engineer from outside the partners as its manager for 3 years under a separate contract. This is permitted, because the article allows the manager to be someone other than the partners and to be appointed in a separate contract for a specified period.

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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