Article 263 of the Saudi Companies Law
المادة 263 من نظام الشركات · الباب الثالث عشر: العقوبات
The article requires taking into account the seriousness, circumstances and effects of the offense or violation when setting the penalty, and doubles the penalties for offenses under Articles 260 and 261 on repetition within 3 years.
Official text (Arabic)
This article has not been amended since the law was issued.
1- يراعى في تحديد العقوبة جسامة الجريمة أو المخالفة، وظروفها، وملابساتها، وآثارها.
2- تضاعف في حالة العود العقوبات المقررة على الجرائم المنصوص عليها في المادتين (الستين بعد المائتين) و(الحادية والستين بعد المائتين) من النظام. ويعد عائدًا في أحكام النظام كل من ارتكب الجريمة ذاتها الصادر بشأنها حكم أو قرار نهائي بالإدانة خلال (ثلاث) سنوات من تاريخ صدور ذلك الحكم أو القرار.
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 263 explained in plain English
This article sets the rules for determining the penalty in the Companies Law.
1- Criteria for determining the penalty: When determining the penalty, the following are taken into account:
- the seriousness of the offense or violation;
- its circumstances;
- its surroundings;
- its effects.
The penalties in the Law are set with an upper limit, and their amount is determined within that limit according to these criteria.
2- Doubling the penalty on repetition: The penalties prescribed for the offenses in Articles 260 and 261 are doubled in the case of repetition. The paragraph does not mention the fines for violations in Article 262 among those that are doubled.
Who is a repeat offender? Anyone who commits the same offense for which a final judgment or decision of conviction was issued, within 3 years of the date that judgment or decision was issued. This requires:
- that the new offense is the same offense;
- that a final judgment or decision of conviction was issued in the first;
- that the new offense occurs within 3 years of its issuance.
Article 264 allows the competent judicial authority to take, in addition to the penalties of Articles 260 and 261 or instead of them, measures such as a warning, requiring corrective steps, or a ban from membership of the board of a listed joint stock company.
Anyone facing repeated accusations needs a lawyer specializing in criminal matters and company matters.
Practical example
A final judgment was issued convicting a company manager in Dammam of one of the offenses in Article 261. Two years after the judgment, he committed the same offense again. He is a repeat offender, so the penalty prescribed for that offense is doubled.
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 263 of the Saudi Companies Law
What is meant by repetition in the Companies Law?
A repeat offender is someone who commits the same offense for which a final judgment or decision of conviction was issued within 3 years of the date that judgment or decision was issued.
Is the penalty doubled if the offense is repeated?
Yes. In the case of repetition, the penalties prescribed for the offenses in Articles 260 and 261 are doubled.
On what basis is the penalty determined?
The seriousness of the offense or violation, its circumstances, its surroundings and its effects are taken into account.
Articles this article refers to
- Article 260
The article punishes with up to 3 years in prison and a fine of up to SAR 5,000,000, or either, anyone who falsifies a company's financial data, uses its funds and powers against its interests, or a liquidator who abuses his role.
دون إخلال بأي عقوبة ينص عليها نظام آخر، يعاقب بالسجن مدة لا تزيد على (ثلاث) سنوات وبغرامة لا تزيد على (5,000,000) خمسة ملايين ريال، أو بإحدى هاتين العقوبتين: أ-
- Article 261
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.
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 للح
More articles on Penalties under the Companies Law
- Article 240
The article makes a foreign company and those who carried on its activity jointly liable if it operated before completing licensing and commercial register registration or went beyond what it was licensed for.
إذا زاولت الشركة الأجنبية نشاطها وأعمالها قبل استيفائها إجراءات الترخيص، إن وجدت، وقيدها لدى السجل التجاري، أو قامت بأعمال تجاوزت المرخص لها فيها، كانت الشركة و
- Article 260
The article punishes with up to 3 years in prison and a fine of up to SAR 5,000,000, or either, anyone who falsifies a company's financial data, uses its funds and powers against its interests, or a liquidator who abuses his role.
دون إخلال بأي عقوبة ينص عليها نظام آخر، يعاقب بالسجن مدة لا تزيد على (ثلاث) سنوات وبغرامة لا تزيد على (5,000,000) خمسة ملايين ريال، أو بإحدى هاتين العقوبتين: أ-
- Article 261
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.
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 للح
- Article 262
The article punishes with a fine of up to SAR 500,000 administrative and regulatory violations, including obstructing assemblies, neglecting records and financial statements, and failing to register in the commercial register.
دون إخلال بأي عقوبة ينص عليها نظام آخر، يعاقب بغرامة لا تزيد على (500,000) خمسمائة ألف ريال: أ- كل من تسبب في تعطيل دعوة الجمعية العامة للشركاء أو المساهمين أو
- Article 264
The article allows the competent judicial authority to take measures such as a warning, requiring correction and a ban from the board of a listed company, in addition to the penalties of Articles 260 and 261 or instead of them.
1- للجهة القضائية المختصة أن تتخذ بالإضافة إلى العقوبات المقررة في المادتين (الستين بعد المائتين) و(الحادية والستين بعد المائتين) من النظام، أو بدلًا عنها؛ أيًّ
- Article 265
The article makes the Public Prosecution the authority competent for investigation and prosecution of the offenses in Articles 260 and 261 of the Companies Law.
تختص النيابة العامة بالتحقيق والادعاء في الجرائم المنصوص عليها في المادتين (الستين بعد المائتين) و(الحادية والستين بعد المائتين) من النظام.
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.