Article 199 of the Saudi Companies Law
المادة 199 من نظام الشركات · الباب الثامن: الشركة المهنية
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.
Official text (Arabic)
This article has not been amended since the law was issued.
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 في الشركة المهنية -أيًّا كان شكلها- صفة التاجر تبعًا لشراكته أو ملكيته للحصص أو الأسهم في الشركة.
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 199 explained in plain English
This article contains two important rules for the professional company:
1- The rules that apply to the company: the rules for the company form it takes apply to the professional company, subject to two limits:
- That this is on matters not covered by a special provision in the chapter dedicated to the professional company; if there is a special provision, it takes precedence over the rules of the form.
- And that it is to the extent it does not conflict with its nature as a company whose purpose is practicing a liberal profession.
Article 198 explained that the professional company takes any of the company forms set out in Article 4 of the Law, so, for example, if it takes a particular form, that form's rules apply to it within these two limits.
2- No acquisition of merchant status: a partner or shareholder in a professional company, whatever its form, does not acquire the status of merchant by virtue of his partnership or his ownership of shares or stock in the company. The mere fact that a person is a partner or shareholder in a professional company does not make him a merchant.
The article negates acquiring the status because of partnership or ownership in the professional company only; it does not address whether a person is a merchant for other reasons.
Article 200 regulates the ways of forming a professional company. To understand the effect of these rules on your professional position, it is advisable to consult a lawyer specializing in companies and commercial cases.
Practical example
A licensed female doctor in Riyadh has become a shareholder in a professional medical company that takes the form of a joint stock company. She does not acquire the status of merchant merely by owning shares in this company, and the rules of the joint stock company apply to the company on matters not covered by a special provision for the professional company, and to the extent they do not conflict with its nature.
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 199 of the Saudi Companies Law
Does a partner in a professional company become a merchant?
No. A partner or shareholder in a professional company, whatever its form, does not acquire the status of merchant by virtue of his partnership or his ownership of shares or stock in it.
Which rules apply to the professional company?
The rules for the company form it takes apply to it on matters not covered by a special provision in the professional company chapter, and to the extent they do not conflict with its nature.
More articles on Professional Company
- Article 197
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.
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.
- 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 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.