Article 197 of the Saudi Companies Law
المادة 197 من نظام الشركات · الباب الثامن: الشركة المهنية
The article defines the professional company as a company formed by one or more persons licensed in one or more liberal professions, or by them together with others, for the purpose of practicing those professions.
Official text (Arabic)
This article has not been amended since the law was issued.
الشركة المهنية هي شركة يؤسسها شخص أو أكثر من المرخص لهم نظامًا في ممارسة مهنة حرة واحدة أو أكثر، أو منهم مع غيرهم، ويكون غرضها ممارسة تلك المهن.
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 197 explained in plain English
This article opens the chapter on the professional company and sets a definition built on four elements:
1- The founders: it is formed by one or more persons legally licensed to practice a liberal profession. It can be formed by a single person, and it can also be formed by a number of licensed persons.
2- The professions: they may be one or more liberal professions, so the company need not be limited to a single profession.
3- Partnership with persons not licensed: the licensed persons may form it together with others, meaning persons not licensed to practice the profession.
4- The purpose: the company's purpose is practicing those professions, which is what distinguishes it from commercial companies.
The definition alone does not determine the form the company takes. Article 198 explains that the professional company takes any of the company forms set out in Article 4 of the Law. For anyone who wishes to turn their professional practice into a company, it is advisable to consult a lawyer specializing in companies and commercial cases.
Practical example
Three licensed engineers in Riyadh want to practice engineering consulting through a single entity, and they wish to bring in an investor who is not an engineer. They may form a professional company whose purpose is practicing the profession, because the definition allows it to be formed by licensed persons together with others.
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 197 of the Saudi Companies Law
What is a professional company?
It is a company formed by one or more persons legally licensed to practice one or more liberal professions, or by them together with others, and its purpose is practicing those professions.
May a professional company be formed by one person?
Yes. It may be formed by a single person who is licensed to practice a liberal profession.
Can someone who is not licensed be a partner in a professional company?
The definition allows the professional company to be formed by licensed persons together with others.
More articles on Professional Company
- Article 198
The article provides that a professional company takes any of the company forms set out in Article 4 of the Companies Law.
تتخذ الشركة المهنية أيًّا من أشكال الشركات الواردة في المادة (الرابعة) من النظام.
- Article 199
The article applies the rules of its form to the professional company where there is no special provision, and provides that a partner or shareholder in it does not acquire the status of merchant by virtue of the partnership.
1- تسري على الشركة المهنية -فيما لم يرد به نص خاص في هذا الباب- الأحكام الخاصة بشكل الشركة الذي تتخذه، وبما لا يتعارض مع طبيعتها. 2- لا يكتسب الشريك أو المساهم
- Article 200
The article sets the ways to form a professional company: between licensed persons, by one person, across several professions or with a non-Saudi professional company, and participation by unlicensed persons under the regulations.
1- للأشخاص المرخص لهم في ممارسة مهنة حرة واحدة أن يؤسسوا فيما بينهم شركة مهنية بأي شكل من الأشكال الواردة في المادة (الرابعة) من النظام. 2- للشخص المرخص له في م
- Article 201
The article bars a partner or shareholder who practices the profession in a professional company from taking part in another professional company practicing the same profession, unless the formation contract or articles of association provide for it.
لا يجوز للشريك في شركة مهنية ولا للمساهم فيها، الممارسين لمهنة حرة، المشاركة ولا المساهمة في شركة مهنية أخرى تمارس المهنة الحرة ذاتها، ما لم ينص عقد تأسيس الشرك
- Article 202
The article provides that a professional company is formed under the formation procedures prescribed for its form, and that partners may dissolve it only after announcement and written notice to everyone dealing with it, under the regulations.
1- تؤسس الشركة المهنية وفقًا لإجراءات التأسيس المقررة لشكل الشركة. 2- لا يجوز للشركاء ولا للمساهمين في الشركة المهنية حلها إلا بعد الإعلان عن ذلك وإبلاغ جميع ال
- Article 203
The article limits practice of the profession in a professional company to licensed partners or shareholders, and allows it to engage other licensed persons under its supervision and responsibility.
لا تمارس الشركة المهنية المهنة أو المهن الحرة محل نشاطها إلا عن طريق الشركاء أو المساهمين المرخص لهم. ومع ذلك، يجوز لها الاستعانة في أعمالها بأشخاص آخرين مرخص ل
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.