Article 186 of the Saudi Companies Law
المادة 186 من نظام الشركات · الباب السابع: الشركة غير الربحية
The article requires the public non-profit company's articles of association to state its public non-profit fields, and allows a non-profit company to collect returns and carry on a lawful activity whose profits are spent on those fields.
Official text (Arabic)
This article has not been amended since the law was issued.
1- يشترط للموافقة على تأسيس الشركة غير الربحية العامة النص في نظامها الأساس على المصارف والمجالات غير الربحية العامة، ويجوز للشركة غير الربحية الخاصة النص في عقد تأسيسها أو نظامها الأساس على أي مصارف ومجالات غير ربحية.
2- مع مراعاة الأنظمة ذات العلاقة، للشركة غير الربحية أن تحصل على عوائد نقدية أو عينية مقابل أعمالها ومنتجاتها وخدماتها، وأن تمارس أي نشاط مشروع يمكنها من تحقيق أرباح تنفقها في المصارف والمجالات المنصوص عليها في عقد تأسيسها أو نظامها الأساس.
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 186 explained in plain English
This article answers two questions: where are the profits of a non-profit company spent? And how does it make these profits in the first place?
First: specifying the outlets and fields
- The public non-profit company: as a condition for approving its formation, its articles of association must state the public non-profit outlets and fields on which its profits are spent. This is a condition for approval of the formation.
- The private non-profit company: it may provide in its formation contract or articles of association for any non-profit outlets and fields. Here it is permitted, not a condition for approval.
Second: sources of income
Subject to the relevant laws, a non-profit company may:
- Obtain cash or in-kind returns in exchange for its work, products and services.
- Carry on any lawful activity that enables it to make profits.
on condition that these profits are spent on the outlets and fields stated in its formation contract or articles of association.
The article is linked to Article 185, which defines the two types and explains that the fields of the public company are specified by the Ministry in coordination with the National Center for Non-Profit Sector Development, and to Article 187, under which an amendment of the outlets and fields of a public non-profit company takes effect only with the Ministry's approval. To draft these fields in the formation documents, it is advisable to consult a lawyer specializing in companies and commercial cases.
Practical example
A public non-profit company in Makkah has articles of association providing that its profits are spent on caring for the elderly. The company provides training services for a fee and sells products. This is permitted as long as it observes the relevant laws and spends the profits on caring for the elderly as its articles of association provide.
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 186 of the Saudi Companies Law
May a non-profit company sell products or provide services for a fee?
Yes. It may obtain cash or in-kind returns in exchange for its work, products and services, subject to the relevant laws, provided the profits are spent on the fields stated in its documents.
Must the spending fields be specified when forming a public non-profit company?
Yes. As a condition for approving its formation, its articles of association must state the public non-profit outlets and fields.
Is the private non-profit company bound by the same fields?
No. It may provide in its formation contract or articles of association for any non-profit outlets and fields.
More articles on Non-Profit Company
- Article 2
تعرّف المادة الشركة بأنها كيان قانوني يقوم على مساهمة شخصين أو أكثر في مشروع ربحي لاقتسام الربح والخسارة، مع جواز تأسيسها بإرادة شخص واحد وتأسيس شركات غير ربحية.
الشركة كيان قانوني يؤسس وفقًا لأحكام النظام بناء على عقد تأسيس أو نظام أساس يلتزم بمقتضاه شخصان أو أكثر بأن يساهم كل منهم في مشروع يستهدف الربح بتقديم حصة من ما
- Article 185
The article defines public and private non-profit companies, sets the forms they may take, prohibits offering their shares for public subscription, and applies the rules of their form where this chapter is silent.
1- الشركة غير الربحية العامة: هي شركة تتخذ شكل شركة المساهمة وليس لها اتخاذ أي شكل آخر، وتنفق الأرباح المتحققة من ممارسة نشاطها في أي من المصارف والمجالات غير ا
- Article 187
The article requires the Ministry's approval for an amendment to a public non-profit company's articles of association to take effect if it covers rules on disposing of assets, the board's powers, or the company's outlets and fields.
إذا اشتمل قرار تعديل النظام الأساس للشركة غير الربحية العامة على تعديل أحكام التصرف في الأصول أو تعديل صلاحيات مجلس الإدارة أو مصارف ومجالات الشركة، فلا يكون هذ
- Article 188
The article makes every partner or shareholder in a non-profit company a member, lets the formation documents regulate membership classes, powers, fees and certificates, and lets the Ministry regulate aspects of membership.
1- يكون كل شريك أو مساهم في الشركة غير الربحية عضوًا. 2- يجوز أن ينص في عقد تأسيس الشركة غير الربحية أو نظامها الأساس على الآتي: أ- تحديد فئات وشروط وأحكام العض
- Article 189
The article provides that each membership class in a non-profit company gives rise to equal rights and obligations, and that a member holds the rights of his membership, including taking part in assembly deliberations and inspecting records.
ترتب كل فئة من فئات العضوية حقوقًا والتزامات متساوية، وتثبت للعضو جميع الحقوق المتصلة بعضويته بما في ذلك الحق في الاشتراك في مداولات جمعيات الأعضاء، وحق الاطلاع
- Article 190
The article sets out how membership in a non-profit company ends: death or loss of legal personality, assignment in a private company, cancellation, expiry of the term without renewal, and the company's termination.
مع مراعاة ما ورد في النظام وعقد تأسيس الشركة غير الربحية أو نظامها الأساس، تنتهي العضوية في الشركة غير الربحية في الحالات الآتية: أ- الوفاة، أو زوال الشخصية الا
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.