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Article 261 of the Saudi Companies Law

المادة 261 من نظام الشركات · الباب الثالث عشر: العقوبات

The article punishes with up to 1 year in prison and a fine of up to SAR 1,000,000, or either, acts including buying votes, distributing profits in bad faith, disclosing secrets and overstating the value of stakes.

Official text (Arabic)

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

دون إخلال بأي عقوبة ينص عليها نظام آخر، يعاقب بالسجن مدة لا تزيد على (سنة) وبغرامة لا تزيد على (1,000,000) مليون ريال، أو بإحدى هاتين العقوبتين:

أ- كل مراجع للحسابات لم يبلغ الشركة عن طريق الأجهزة أو الأشخاص المسؤولين عن إدارتها عن المخالفات التي يكتشفها أثناء عمله والتي يبدو له أنها مخالفات جنائية.

ب- كل من حصل على منافع أو على ضمان، أو وعُد بها، مقابل التصويت في اتجاه معين أو عدم المشاركة في التصويت؛ من أجل الإضرار بمصالح الشركة، وكذلك كل من منح أو ضمن أو وَعد بتلك المنافع.

ج- كل من أعلن أو نشر أو صرّح بأي وسيلة، قاصدًا الإيهام بحصول قيد شركة لم تستكمل إجراءات قيدها لدى السجل التجاري.

د- كل موظف عام أفشى لغير الجهات المختصة أسرار الشركة التي اطلع عليها بحكم وظيفته.

هـ- كل من عمل، من أجل استيفاء أقيام الحصص وجلب اكتتابات، على نشر أسماء لأشخاص خلافًا للحقيقة واعتبارهم مرتبطين بالشركة، أو أنهم سيرتبطون بها بأي شكل من الأشكال.

و- كل من قرر توزيع أرباح أو عوائد أو وزعها أو قبضها، بسوء نية؛ بما يخالف أحكام النظام أو عقد تأسيس الشركة أو نظامها الأساس، وكل مراجع حسابات علم بتلك المخالفة ولم يبلغ عنها في تقريره.

ز- كل من بالغ أو قدم إقرارات أو بيانات كاذبة من الشركاء أو المساهمين أو من غيرهم، فيما يخص تقييم الحصص العينية أو توزيع الحصص بين الشركاء أو الأسهم بين المساهمين، أو الوفاء بكامل قيمتها مع علمه بذلك، سواء كان ذلك عند تأسيس الشركة أو عند زيادة رأس المال أو عند تعديل توزيع الحصص بين الشركاء أو الأسهم بين المساهمين.

ح- كل مدير أو مسؤول أو عضو مجلس إدارة أو مراجع حسابات، لم يدعُ الجمعية العامة للشركاء أو المساهمين -أو لم يتخذ ما يلزم لذلك بحسب الأحوال- عند علمه ببلوغ الخسائر الحدود المقدرة وفقًا لأحكام المادتين (الثانية والثلاثين بعد المائة) و(الثانية والثمانين بعد المائة) من النظام.

ط- كل مدير أو مسؤول أو عضو مجلس إدارة أو مراجع حسابات أو مصفّ، استغل أو أفشى سرًّا من أسرار الشركة بقصد الإضرار بها.

ي- كل من أعاق عمدًا عمل الذين لهم الحق -بحكم النظام- في الاطلاع على أوراق الشركة ومستنداتها وحساباتها وسجلاتها ووثائقها، أو تسبب في ذلك، أو امتنع عن تمكينهم من أداء عملهم.

ك- كل شخص معين من أجل التفتيش على الشركة يثبت عمدًا فيما يعده من تقارير وقائع كاذبة، أو يغفل عمدًا ذكر وقائع جوهرية من شأنها أن تؤثر في نتيجة التفتيش.

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 261 explained in plain English

This article sets the penalty for less serious offenses, without prejudice to any penalty in another law: imprisonment for a period not exceeding one year, and a fine not exceeding SAR 1,000,000, or either. It covers:

  • a- An auditor who did not report to the company, through those responsible for its management, violations he discovered that appear to him to be criminal.
  • b- Anyone who obtained benefits or a guarantee or promise of them in return for voting in a particular direction or not voting so as to harm the company's interests, and anyone who gave, guaranteed or promised them.
  • c- Anyone who announced or published with the intent of creating the impression that a company that has not completed its registration with the commercial register is registered.
  • d- A public employee who disclosed to anyone other than the competent authorities the secrets of a company that he learned of by virtue of his job.
  • e- Anyone who published the names of persons, contrary to the truth, as connected or about to be connected with the company, in order to collect stakes and attract subscriptions.
  • f- Anyone who decided to distribute profits or returns, or distributed or received them, in bad faith contrary to the Law, the articles of association or the bylaws, and an auditor who knew and did not report it in his report.
  • g- Anyone who exaggerated, or knowingly submitted false declarations or statements, in valuing in-kind stakes or in distributing stakes or shares or paying their value, on formation, an increase in capital or a change in the distribution.
  • h- A manager, official, board member or auditor who did not call the general assembly, or did not take what is necessary to do so, when he knew that losses had reached the limits set under Articles 132 and 182.
  • i- A manager, official, board member, auditor or liquidator who exploited or disclosed a secret of the company with the intent of harming it.
  • j- Anyone who deliberately obstructed the work of those entitled to inspect the company's papers and records, or caused that, or refused to enable them.
  • k- A person appointed to inspect the company who deliberately recorded false facts or deliberately omitted material facts that had an effect.

The more serious acts are punished by Article 260 with up to 3 years in prison and a fine of up to SAR 5,000,000, and Article 262 sets fines for violations.

Anyone facing an accusation under this article needs a lawyer specializing in criminal matters and company matters.

Practical example

A shareholder in a company in Jeddah agreed with another shareholder to pay him an amount in return for voting against a particular decision, with the intent of harming the company's interests. This act falls under paragraph (b), so both the person who received the amount and the person who paid it are punished with imprisonment for a period not exceeding one year and a fine not exceeding SAR 1,000,000, or either.

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 261 of the Saudi Companies Law

What is the penalty for selling a vote in a company's general assembly?

Anyone who obtained benefits in return for voting in a particular direction or not voting in order to harm the company's interests, and anyone who gave or promised them, is punished with imprisonment for a period not exceeding one year and a fine not exceeding SAR 1,000,000, or either.

What is the penalty for distributing profits in violation of the Companies Law?

Anyone who decided to distribute, distributed or received profits or returns in bad faith contrary to the Law, the articles of association or the bylaws is punished with the same penalty, as is an auditor who knew and did not report it in his report.

Is anyone who prevents a partner from inspecting the company's records punished?

Yes. Anyone who deliberately obstructed the work of those legally entitled to inspect the company's papers and records, or caused that, or refused to enable them, is punished.

Articles this article refers to

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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.