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Article 188 of the Saudi Companies Law

المادة 188 من نظام الشركات · الباب السابع: الشركة غير الربحية

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.

Official text (Arabic)

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

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 العضوية فيها.

ب- تحديد صلاحيات فئات العضوية، والموضوعات التي يلزم لها الحصول على موافقة الجمعية الخاصة بأعضاء الشركة، والنصاب اللازم لذلك، ويشمل ذلك حق الرقابة على المدير أو مجلس الإدارة، والتحقق من إنفاق أرباح الشركة على تحقيق أهدافها في المصارف والمجالات المنصوص عليها في عقد تأسيسها أو نظامها الأساس.

ج- منح فئة معينة من الأعضاء الحق في التصويت على قرارات الشركة في جمعية خاصة.

د- منح فئة معينة من الأعضاء الحق في تعيين واحد أو أكثر من مديري الشركة أو أعضاء مجلس الإدارة، وفي هذه الحالة لا يجوز عزله إلا من قبل الفئة التي عينته.

هـ- إصدار شهادات عضوية تكون غير قابلة للتداول. واستثناء من ذلك، يجوز النص على تنازل عضو الشركة غير الربحية الخاصة عن عضويته.

و- اشتراط دفع رسوم سنوية أو مساهمات نقدية أو عينية على فئة أو أكثر من فئات عضوية الشركة غير الربحية.

ز- اشتراط تقديم عمل أو خدمة للشركة للحصول على عضويتها.

3- للوزارة تنظيم الجوانب المتعلقة بالعضوية في الشركات غير الربحية.

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 188 explained in plain English

In a non-profit company, a partner or shareholder is called a member, and the article gives wide flexibility in organizing membership.

1- Who is a member? Every partner or shareholder in the non-profit company.

2- What the formation contract or articles of association may provide:

  • Setting the classes of membership and their conditions and rules.
  • Setting the powers of each class, and the matters that need the approval of the members' assembly and the quorum required for them, including oversight of the manager or board of directors, and verifying that profits are spent on the specified outlets and fields.
  • Giving a particular class the right to vote on company resolutions in a special assembly.
  • Giving a particular class the right to appoint one or more managers or members of the board of directors, in which case a person so appointed may be removed only by the class that appointed him.
  • Issuing non-tradable membership certificates, with a provision permitting a member to assign his membership in the private non-profit company only.
  • Requiring annual fees or cash or in-kind contributions from one or more classes.
  • Requiring the provision of work or a service to the company in order to obtain membership.

3- The Ministry's role: the Ministry may regulate the aspects relating to membership in non-profit companies.

Article 189 completes this rule by providing that each class gives rise to equal rights and obligations for its members. To design a membership system that suits the company, it is advisable to consult a lawyer specializing in companies and commercial cases.

Practical example

A private non-profit company in Riyadh that supports students has articles of association providing for two classes: founding members, who have the right to appoint two members of the board of directors, and supporting members, who pay annual fees. The two appointed members may be removed only by the founding class that appointed them, and membership certificates are not tradable, but the articles of association permit a member to assign his membership because it is a private company.

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 188 of the Saudi Companies Law

Can membership in a non-profit company be sold?

Membership certificates are not tradable, and as an exception the articles may permit a member of a private non-profit company to assign his membership.

May annual fees be imposed on members of a non-profit company?

Yes. The company's documents may require annual fees or cash or in-kind contributions from one or more classes of membership.

Who can remove a board member appointed by a particular class of members?

He may be removed only by the class that appointed him.

More articles on Non-Profit Company

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.