Article 247 of the Saudi Companies Law

المادة 247 من نظام الشركات · الباب الثاني عشر: انقضاء الشركة وتصفيتها

The article permits liquidation by one or more liquidators from among the partners or others, and limits its period to 3 years, extendable only by court order.

Official text (Arabic)

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

1- يقوم بالتصفية مصف واحد أو أكثر، من الشركاء أو المساهمين أو من غيرهم.

2- يجب ألا تتجاوز مدة التصفية بموجب النظام (ثلاث) سنوات، ولا يجوز تمديدها إلا بأمر من الجهة القضائية المختصة.

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 247 explained in plain English

This article sets two basic rules for liquidation: who carries it out, and how long it lasts.

First: the liquidator (paragraph 1)

Liquidation is carried out by one or more liquidators, who may be the partners or shareholders themselves, or others. The liquidator is not required to be from outside the company, nor from inside it.

Second: the liquidation period (paragraph 2)

The liquidation period under the Law must not exceed 3 years.
It may be extended only by order of the competent judicial authority; the partners or the liquidator cannot extend it themselves.

The purpose of fixing the period is that the company should not remain suspended in liquidation for many years at the expense of creditors and partners.

This article is linked to Article 248, which regulates the decision to appoint the liquidator: it is appointed by a decision of the partners, the general assembly or the shareholders within a period not exceeding 60 days of the date of the ending, failing which the competent judicial authority appoints him at the request of any partner, shareholder or interested party, and the decision must specify the period needed for liquidation. Article 246 also provides that the manager or board remain in charge of management and are treated as liquidators with respect to third parties until the liquidator is appointed.

If a company's liquidation needs longer, the request for an extension is made to the competent judicial authority, and it is wise to use a lawyer specializing in commercial matters and companies for it.

Practical example

The partners in a family company in Madinah decided to dissolve it, and appointed one of them as liquidator together with an accountant from outside the company. The liquidation must end within 3 years, and if selling the company's properties turns out to need longer, they do not extend the period themselves; an order from the competent judicial authority is required.

Translated from our Arabic explanation with machine assistance. For guidance only; it does not replace advice from a lawyer on your situation.

How we write and review content

A question about Article 247 of Companies Law?

Describe what happened and specialist lawyers answer. You can write in English.