Article 163 of the Saudi Companies Law

المادة 163 من نظام الشركات · الفصل الثالث: إدارة الشركة ذات المسؤولية المحدودة

The article requires the partners to appoint a new manager within 15 days of learning that the sole manager's position is vacant, and allows the auditor or any partner to call the general assembly for this.

Official text (Arabic)

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

إذا كان للشركة ذات المسؤولية المحدودة مدير واحد، فيجب على الشركاء في حال خلو منصبه تعيين مدير جديد للشركة خلال (خمسة عشر) يومًا من تاريخ العلم بذلك، ويكون لمراجع حسابات الشركة -إن وجد- أو أي من الشركاء حق دعوة الجمعية العامة إلى الانعقاد لتعيين مدير جديد للشركة.

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 163 explained in plain English

This article deals with the case where the position of manager falls vacant in a limited liability company with a single manager, because a company left without a manager has its business and representation disrupted.

The article contains two provisions:

The duty to appoint: the partners must appoint a new manager for the company within 15 days of the date they learn the position is vacant.
The right to call the general assembly: the company's auditor, if there is one, or any of the partners, has the right to call the general assembly to meet to appoint a new manager.

Note that the article counts the period from the date of learning of the vacancy, and does not specify the causes of the vacancy, so it covers any case in which the position becomes vacant. Also, giving the right to call the assembly to any partner means that a partner does not need a particular percentage of the capital to call the assembly in this case.

Article 162 shows the importance of having a manager, as they represent the company before the courts, arbitration bodies and third parties, and any resolution appointing or changing them does not take effect against third parties until registered with the commercial register. Article 164 regulates the removal of a manager and requires the partners to appoint a successor to the one removed. To learn the appropriate procedures for a particular case, it is possible to consult a lawyer who specializes in companies and commercial disputes.

Practical example

The sole manager of a limited liability company in Dammam resigned, and the partners learned of it on a Sunday. They must appoint a new manager within 15 days of that day, and any of them, such as Ali who owns a small share, may call the general assembly to meet for this purpose.

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 163 of Companies Law?

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