Article 162 of the Saudi Companies Law
المادة 162 من نظام الشركات · الفصل الثالث: إدارة الشركة ذات المسؤولية المحدودة
The 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.
Official text (Arabic)
This article has not been amended since the law was issued.
1- يمثل الشركة ذات المسؤولية المحدودة مديرها أمام القضاء وهيئات التحكيم والغير، وله تفويض الغير في بعض صلاحياته لمباشرة عمل أو أعمال معينة.
2- لا يسري في مواجهة الغير أي قرار يصدر بتعيين المدير أو بتغييره أو بتقييد سلطاته؛ إلا بعد قيده لدى السجل التجاري.
3- تلتزم الشركة بأعمال المدير التي تدخل في غرض الشركة.
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 162 explained in plain English
This article sets out the role of the manager of a limited liability company in its dealings with others, and contains three provisions:
- Representation: the manager represents the company before the courts, arbitration bodies and third parties. They may delegate others to exercise some of their powers to carry out a particular act or acts; the delegation is of some of the powers, not all of them.
- Registration in the commercial register: any resolution appointing or changing the manager or restricting their powers does not take effect against third parties until it has been registered with the commercial register. If the partners remove a manager and do not register this, the removal cannot be invoked against third parties.
- The company being bound by the manager's acts: the company is bound by the manager's acts that fall within the company's purpose.
The aim is to protect those who deal with the company, such as banks, suppliers and customers, who rely on what is registered in the commercial register.
Article 161 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 there are several managers. Article 163 regulates the case where the position of sole manager falls vacant and the duty to appoint a replacement within 15 days of learning of it. To review the limits of a manager's powers in a particular case, it is possible to consult a lawyer who specializes in companies and commercial disputes.
Practical example
The partners in a company in Riyadh decided to restrict their manager's powers to enter into contracts, but they did not register the decision with the commercial register. The manager then signed a supply contract within the company's purpose with a supplier who did not know of the restriction. The restriction does not take effect against the supplier because it was not registered with the commercial register.
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 162 of the Saudi Companies Law
Who represents a limited liability company before the courts?
Its manager represents it before the courts, arbitration bodies and third parties.
Can the company's manager delegate someone else?
Yes. They may delegate others to exercise some of their powers to carry out a particular act or acts.
When does a resolution changing the manager take effect against third parties?
A resolution appointing or changing the manager or restricting their powers does not take effect against third parties until it has been registered with the commercial register.
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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
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- Article 157
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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
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يتبع في تقييم الحصص العينية الأحكام المنصوص عليها في المادة (الحادية والأربعين بعد المائة) من النظام.
- 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
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.