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Article 183 of the Saudi Companies Law

المادة 183 من نظام الشركات · الفصل الخامس: انقضاء الشركة ذات المسؤولية المحدودة

The article regulates extending the term of a fixed-term company by a resolution of partners holding half the capital, automatic extension if it keeps operating, a reluctant partner's right to exit, and the right of third parties to object.

Official text (Arabic)

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

1- يجوز مدّ أجل الشركة إذا كانت محددة المدة قبل انقضائها لمدة أخرى بقرار تصدره الجمعية العامة للشركاء من أيّ عدد من الشركاء المالكين لنصف الحصص الممثلة لرأس المال؛ ما لم ينص عقد تأسيس الشركة على أغلبية أكبر.

2- إذا لم يصدر قرار بمد أجل الشركة واستمرت في أداء أعمالها، امتد أجلها لمدة مماثلة بالشروط ذاتها الواردة في عقد تأسيسها.

3- للشريك الذي لا يرغب في الاستمرار في الشركة أن يتخارج منها، وتقوَّم حصصه وفقًا للأحكام الواردة في المادة (الثامنة والسبعين بعد المائة) من النظام، ولا ينفذ التمديد إلا بعد بيع حصة هذا الشريك للشركاء أو الغير -بحسب الأحوال- وأداء قيمتها له، ما لم يتفق الشريك المنسحب مع باقي الشركاء على غير ذلك.

4- يجوز للغير الذي له مصلحة في عدم مد الأجل الاعتراض عليه والتمسك بعدم نفاذه في حقه.

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 183 explained in plain English

This article deals with a company whose formation contract sets a specific term, and explains how that term is extended and what rights belong to anyone who does not wish to continue.

1- Resolution to extend the term: the term of the company may be extended before it expires for a further period by a resolution of the general assembly of partners, passed by any number of partners owning half of the shares representing the capital, unless the formation contract requires a larger majority.

2- Extension without a resolution: if no extension resolution is passed and the company continues to carry on its business, its term is extended for a similar period and on the same terms stated in its formation contract.

3- The partner's right to exit: a partner who does not wish to continue may exit the company, and his shares are valued in accordance with Article 178. The extension takes effect only after his share has been sold to the partners or to third parties, as the case may be, and its value has been paid to him, unless the withdrawing partner agrees otherwise with the remaining partners.

4- The right of third parties: anyone other than the partners who has an interest in the term not being extended may object to it and rely on the fact that it is not effective against him.

This case differs from Article 184, which states that a limited liability company does not terminate on the death or withdrawal of a partner unless the formation contract so provides. Before voting on an extension or requesting an exit, it is advisable to consult a lawyer specializing in companies and commercial cases.

Practical example

A company in Dammam has a term of ten years in its formation contract, and before it ended, partners owning half of the shares voted to extend it for another ten years. One of the partners, Abdullah, does not wish to continue. He has the right to exit and to have his share valued under Article 178, and the extension does not take effect until his share is sold and he receives its value, unless he agrees otherwise with the other 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 183 of the Saudi Companies Law

How is the term of a limited liability company extended?

By a resolution of the general assembly of partners, passed by partners owning half of the shares representing the capital before the term expires, unless the formation contract requires a larger majority.

What happens if the company's term ends and it keeps operating without an extension resolution?

Its term is extended for a similar period and on the same terms stated in its formation contract.

Can I withdraw if I do not want the company to be extended?

Yes. A partner who does not wish to continue may exit and have his shares valued under Article 178. The extension takes effect only after his share has been sold and its value paid to him, unless he agrees otherwise with the partners.

Articles this article refers to

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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.