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Article 184 of the Saudi Companies Law

المادة 184 من نظام الشركات · الفصل الخامس: انقضاء الشركة ذات المسؤولية المحدودة

The article provides that a limited liability company does not terminate on the death, interdiction, bankruptcy, insolvency or withdrawal of a partner, unless its formation contract so provides.

Official text (Arabic)

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

لا تنقضي الشركة ذات المسؤولية المحدودة بوفاة أحد الشركاء، ولا بالحجر عليه، ولا بافتتاح أي من إجراءات التصفية تجاهه وفقًا لنظام الإفلاس، ولا بإعساره، ولا بانسحابه، ما لم ينص عقد تأسيس الشركة على ذلك.

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 184 explained in plain English

This article protects the continuity of a limited liability company from being affected by a partner's personal circumstances. The rule is that the company remains in existence even if any of the following happens to one of the partners:

  • Death.
  • Interdiction.
  • The opening of any liquidation procedure against him under the Bankruptcy Law.
  • Insolvency.
  • Withdrawal.

The company does not terminate merely because any of these occurs; it remains in existence.

The exception: if the company's formation contract provides that the company terminates on any of these events, the contract applies. Reviewing the formation contract is therefore the first step in finding out the effect of a partner's death or withdrawal on the company.

This article does not state what follows from a partner's death or withdrawal as regards the fate of his share; it is limited to saying that the company itself does not terminate. It is connected to Article 183, which regulates extending the company's term and the right of a partner who does not wish to continue to exit.

To deal with a specific case, such as the death of a partner and the heirs wanting to know their position, it is advisable to consult a lawyer specializing in companies and commercial cases.

Practical example

Three partners own a limited liability company trading in building materials in Riyadh, and one of them has died. The formation contract does not provide that the company terminates on the death of a partner, so the company remains in existence and continues its business, and does not terminate because of the death.

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 184 of the Saudi Companies Law

Does a limited liability company end if one of the partners dies?

No. The company does not terminate on the death of a partner, unless its formation contract so provides.

If one of the partners goes bankrupt, is the company dissolved?

The company does not terminate on the opening of any liquidation procedure against the partner under the Bankruptcy Law, nor on his insolvency, unless the formation contract provides otherwise.

Can it be agreed that the company ends if a partner withdraws?

Yes. The company's formation contract may provide that it terminates on any of the events listed in the article, including withdrawal.

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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.