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Article 170 of the Saudi Companies Law

المادة 170 من نظام الشركات · الفصل الثالث: إدارة الشركة ذات المسؤولية المحدودة

The article allows a partner who objected in writing to ask for annulment of a general assembly decision that breaches the Law or the memorandum of association, within 90 days of it, provided they remain a partner throughout the case.

Official text (Arabic)

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

1- دون إخلال بحقوق الغير حسن النية، لكل شريك التقدم إلى الجهة القضائية المختصة بطلب إبطال قرار الجمعية العامة للشركاء الصادر بالمخالفة لأحكام النظام أو عقد تأسيس الشركة. ومع ذلك، لا يجوز أن يطلب إبطال القرار إلا الشركاء الذين اعترضوا كتابة عليه أو الذين لم يتمكنوا من الاعتراض عليه بعد علمهم به، ويترتب على تقرير البطلان اعتبار القرار كأن لم يكن بالنسبة إلى جميع الشركاء.

2- لا تسمع دعوى البطلان بعد انقضاء (تسعين) يومًا من تاريخ صدور القرار المشار إليه في الفقرة (1) من هذه المادة.

3- يشترط لرفع الدعوى المشار إليها في الفقرة (1) من هذه المادة أن يكون رافع الدعوى شريكًا في الشركة أثناء رفع الدعوى وخلال جميع إجراءاتها.

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 170 explained in plain English

This article gives every partner a way to protect themselves against unlawful general assembly decisions, namely the action for annulment, and sets conditions for it:

  • Grounds for the action: the decision of the partners' general assembly must have been made in breach of the provisions of the Law or the company's memorandum of association.
  • The authority: the action is brought before the competent judicial authority.
  • Who may apply: annulment may be requested only by partners who objected in writing to the decision, or who were unable to object to it after learning of it.
  • The period: the action will not be heard after 90 days have passed from the date of the decision.
  • Continuing status: the claimant must be a partner when the action is filed and throughout all its proceedings.

If annulment is ordered, the decision is treated as if it had never been made as regards all the partners, not only the claimant. This is without prejudice to the rights of good-faith third parties.

Because the period runs from the date of the decision, delay may cause a partner to lose the right to have the action heard. Article 169 gives a partner the right to ask for matters to be included on the agenda and to question the manager, and Article 171 sets out voting rights and inspection of the company's records. To assess whether these conditions are met in your case, it is advisable to consult a lawyer who specializes in companies and commercial disputes without delay.

Practical example

The general assembly of a company in Jeddah made a decision that breaches the memorandum of association, and Hind objected to it in writing during the meeting. She is entitled to apply to the competent judicial authority for its annulment within 90 days of the date it was made, provided she remains a partner throughout the case. If annulment is ordered, the decision is treated as if it had never been made for all the partners.

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 170 of the Saudi Companies Law

What is the time limit for bringing an action to annul a partners' general assembly decision?

The action for annulment will not be heard after 90 days have passed from the date of the decision.

Is every partner entitled to ask for a decision to be annulled?

Annulment may be requested only by partners who objected to the decision in writing, or who were unable to object to it after learning of it.

What is the effect of a judgment annulling a partners' decision?

The decision is treated as if it had never been made as regards all the partners, without prejudice to the rights of good-faith third parties.

Does the right to bring the action continue if the partner sells their share during the case?

The claimant must be a partner when the action is filed and throughout all its proceedings.

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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.