Article 207 of the Saudi Companies Law
المادة 207 من نظام الشركات · الباب الثامن: الشركة المهنية
The article regulates managing a professional company by one or more managers who are partners or others, requires a sole manager to be a licensed partner, and has a professional joint stock company managed by a board under the regulations.
Official text (Arabic)
This article has not been amended since the law was issued.
1- دون إخلال بالفقرة (2) من هذه المادة، يتولى إدارة الشركة المهنية واحد -أو أكثر- من الشركاء فيها أو من غيرهم، فإذا تولى إدارتها شخص واحد وجب أن يكون من الشركاء المرخص لهم، وإذا تولى إدارتها أكثر من شخص فلا يجوز أن يقل عدد الشركاء المرخص لهم عما تحدده اللوائح. ويحدد عقد تأسيس الشركة أو نظامها الأساس شروط تعيين المدير، وسلطاته، ومكافآته، ومدة إدارته للشركة، وطريقة عزله.
2- يتولى إدارة شركة المساهمة المهنية مجلس إدارة يُكوّن من مساهميها أو من غيرهم. وتحدد اللوائح عدد أعضاء مجلس الإدارة الذين يتعين أن يكونوا من المساهمين المرخص لهم. ويحدد نظام الشركة الأساس صلاحيات المجلس والأحكام المتعلقة بتشكيله.
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 207 explained in plain English
This article sets out who manages the professional company, and distinguishes the professional joint stock company from the others.
First: the professional company in general (without prejudice to the rule on the professional joint stock company):
- It is managed by one or more partners or others.
- If it is managed by one person, he must be one of the licensed partners.
- If it is managed by more than one person, the number of licensed partners among them may not be less than what the regulations specify.
- The formation contract or articles of association set the conditions for appointing the manager, his powers, his remuneration, the term of his management, and the method of his removal.
Second: the professional joint stock company:
- It is managed by a board of directors made up of its shareholders or others.
- The regulations specify the number of board members who must be licensed shareholders.
- The articles of association set the board's powers and the rules relating to its composition.
The aim is that licensed professionals keep a role in managing the company. The article itself does not specify the required number or percentage, but refers to the regulations for it.
The article is connected to Article 208, which bars the manager's or board's authority from including anything that impairs the independence of partners or shareholders in practicing their professions, and to Article 206, which regulates a partner's practice of his profession outside the company. To draft the management provisions in the formation contract, it is advisable to consult a lawyer specializing in companies and commercial cases.
Practical example
A professional law firm in Riyadh is owned by three licensed lawyers and an investor. If they want to appoint a single manager for the company, he must be one of the licensed lawyer partners, and the investor alone may not be the manager. If they appoint a management committee of several persons, unlicensed persons may be among them, provided the number of licensed partners is not less than what the regulations specify.
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 207 of the Saudi Companies Law
May a professional company be managed by someone who is not a partner?
Yes. It may be managed by one or more partners or others, but if it is managed by a single person he must be one of the licensed partners.
Who manages a professional joint stock company?
It is managed by a board of directors made up of its shareholders or others, and the regulations specify the number of members who must be licensed shareholders.
How is the manager of a professional company removed?
The company's formation contract or articles of association set the method of removing the manager, as well as the conditions of his appointment, his powers, his remuneration and the term of his management.
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 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
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.