Article 179 of the Saudi Companies Law

المادة 179 من نظام الشركات · الفصل الرابع: رأس المال والحصص

The article allows a limited liability company to issue tradable debt instruments or financing sukuk in accordance with the Capital Market Law, with the approval of the partners in the manner for amending the memorandum of association.

Official text (Arabic)

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

1- للشركة ذات المسؤولية المحدودة أن تصدر -وفقًا لنظام السوق المالية- أدوات دين أو صكوكًا تمويلية قابلة للتداول.

2- يجب أن تصدر أدوات الدين أو الصكوك التمويلية بموافقة الشركاء وفقًا للأوضاع المقررة لتعديل عقد تأسيس 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 179 explained in plain English

This article opens one avenue of financing to a limited liability company, as it allows it to issue tradable debt instruments or financing sukuk.

The article sets two conditions for this:

Subject to the Capital Market Law: the issue is made in accordance with the Capital Market Law, so the details and requirements of the issue are to be found in that Law, and this article does not state them.
Partners' approval: the issue must have the approval of the partners in the manner prescribed for amending the company's memorandum of association.

This means the decision to issue is not taken by the manager alone, but needs the partners' approval in the same way and by the same percentage as the Law requires for amending the memorandum of association, so the issue is treated in this respect like an amendment of the contract.

Article 178 regulates assigning shares and the right of redemption, while Article 180 allows the company to buy or take its own shares in pledge if its memorandum of association so provides, and allows shares to be pledged.

Because issuing debt instruments creates financial obligations for the company and is subject to another Law, it is advisable to consult a lawyer who specializes in companies and securities before taking the decision.

Practical example

A limited liability company in Riyadh needs financing to build a new factory, and is considering issuing financing sukuk. The issue must be in accordance with the Capital Market Law, and the partners must approve it in the manner prescribed for amending the memorandum of association.

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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