Article 171 of the Saudi Companies Law
المادة 171 من نظام الشركات · الفصل الثالث: إدارة الشركة ذات المسؤولية المحدودة
The article sets out a partner's rights to vote according to their shares, appoint a proxy and inspect the company's records twice a year, and obliges anyone who obtains information to keep it confidential.
Official text (Arabic)
This article has not been amended since the law was issued.
1- يكون لكل شريك حق الاشتراك في المداولات وفي التصويت، ويكون له عدد من الأصوات يعادل عدد الحصص التي يملكها، ولا يجوز الاتفاق على غير ذلك.
2- يجوز لكل شريك أن يوكل عنه -كتابة- شريكًا آخر في حضور اجتماعات الشركاء والتصويت فيها، ما لم ينص عقد تأسيس الشركة على غير ذلك. ويجوز أن ينص في عقد التأسيس على جواز أن يوكل الشريك عنه من يراه من غير الشركاء -كتابة- لحضور اجتماعات الشركاء والتصويت فيها.
3- للشريك غير المدير أن يقدم الآراء إلى المدير، وله -أو لمن يفوضه- طلب الاطلاع في مركز الشركة على أعمالها وفحص سجلاتها ووثائقها (مرتين) خلال السنة المالية للشركة، وعلى الشركة أن تلبي طلبه خلال (خمسة عشر) يومًا من تاريخ طلبه. ويعد باطلًا كل شرط مخالف لذلك.
4- يلتزم كل من حصل على أي معلومة -بناء على هذه المادة- بالمحافظة على سريتها وعدم استخدامها في أي غرض قد يضر بالشركة أو أحد الشركاء فيها، ويلتزم بالتعويض عن أي ضرر ينشأ عن عدم الالتزام بذلك.
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 171 explained in plain English
This article brings together the main rights and obligations of a partner in a limited liability company:
- Voting: every partner has the right to take part in deliberations and vote, and their number of votes equals the number of their shares, and an agreement to the contrary is not permitted.
- Proxies: a partner may appoint another partner in writing to attend meetings and vote, unless the memorandum of association provides otherwise. Non-partners may not be appointed as proxies unless the memorandum of association allows it, and the proxy must be in writing.
- Inspection and oversight: a partner who is not a manager may give their views to the manager, and they or their delegate may ask to inspect the company's business at its head office and examine its records and documents twice during the financial year, and the company must meet the request within 15 days. Any condition contrary to this is void.
- Confidentiality: anyone who obtains information under this article must keep it confidential and not use it in a way that may harm the company or one of the partners, and is liable to compensate for any harm resulting from breach of this.
Article 170 provides for a partner's right to ask for annulment of an assembly decision that breaches the Law or the memorandum of association within 90 days of it, on conditions. Article 172 provides that amending the memorandum of association needs the approval of those representing at least three quarters of the capital. If your request to inspect is refused, you can consult a lawyer who specializes in companies and commercial disputes.
Practical example
Reem owns 20% of the shares of a company in Riyadh and does not take part in managing it. She asked to inspect the company's records, so the company must meet her request within 15 days, and she is entitled to do so twice in the financial year. If she sees information about the company's customers, she must keep it confidential or be liable to compensate for the harm.
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 171 of the Saudi Companies Law
How many times is a partner entitled to inspect the company's records?
A partner who is not a manager, or their delegate, may ask to inspect twice during the financial year, and the company must meet the request within 15 days.
Can a partner agree to have more votes than their shares?
No. A partner's number of votes equals the number of their shares and an agreement to the contrary is not permitted.
Can a non-partner be appointed to vote as a proxy?
Only if the memorandum of association so provides, and the proxy must be in writing.
Is a condition in the contract preventing a partner from inspecting the records void?
Yes. The article provides that any condition contrary to the right of inspection it sets out is void.
More articles on Limited Liability Company
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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 159
For valuing in-kind shares in a limited liability company, the article refers to the provisions of Article 141 of the Companies Law.
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.