Article 195 of the Saudi Companies Law
المادة 195 من نظام الشركات · الباب السابع: الشركة غير الربحية
The article allows government entities, public bodies and institutions, universities and other public legal persons permitted to do so to form non-profit companies, and allows public sector employees to form public non-profit companies.
Official text (Arabic)
This article has not been amended since the law was issued.
1- مع مراعاة الأنظمة والقرارات ذات العلاقة، يجوز تأسيس شركات غير ربحية من قبل الجهات الحكومية والهيئات والمؤسسات العامة والجامعات وغيرها من الأشخاص ذوي الصفة الاعتبارية العامة المسموح لها بذلك.
2- يجوز لموظفي القطاع العام تأسيس شركات غير ربحية عامة أو المشاركة في 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 195 explained in plain English
This article deals with public sector participation in forming non-profit companies, and contains two rules:
1- Formation by public entities: subject to the relevant laws and decisions, non-profit companies may be formed by:
- Government entities.
- Public bodies and institutions.
- Universities.
- Other persons with public legal personality who are permitted to do so.
The permission here is limited by the requirement that the entity be permitted to do so, and by the laws and decisions that govern each entity's work.
2- Public sector employees: public sector employees may form public non-profit companies or take part in forming them. The text of this paragraph is limited to public non-profit companies and does not address the private non-profit company.
The public non-profit company, as Article 185 explains, takes the form of a joint stock company and spends its profits on fields aimed exclusively at serving society as a whole. This is consistent with Article 194, which prohibits distributing the profits of a non-profit company to its members and managers unless that falls within its outlets and fields.
The article does not set out additional procedures or conditions for an employee's participation, but it does not cancel what other laws provide. To understand your position as an employee or public entity, it is advisable to consult a lawyer specializing in companies and commercial cases.
Practical example
An employee at a ministry in Riyadh wants to join his friends in forming a public non-profit company to prepare young people for work. The article permits him to form a public non-profit company or take part in forming one. Likewise, a university that is permitted to do so may form a non-profit company, subject to the relevant laws and decisions.
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 195 of the Saudi Companies Law
May a government employee form a non-profit company?
Yes. Public sector employees may form public non-profit companies or take part in forming them.
Can universities form non-profit companies?
Yes. Universities and other persons with public legal personality who are permitted to do so may form non-profit companies, subject to the relevant laws and decisions.
Does the article cover the private non-profit company as regards employees?
The paragraph on employees addresses public non-profit companies only.
More articles on Non-Profit Company
- Article 2
Article 2 defines a company as a legal entity in which two or more persons contribute to a profit-seeking venture to share its profit and loss, and allows a company to be formed by one person or as a non-profit.
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 186
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.
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 عق
- 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
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.