Article 268 of the Saudi Companies Law
المادة 268 من نظام الشركات · الباب الثالث عشر: العقوبات
The article gives the employees charged with detecting the Companies Law's offenses and violations judicial-officer status and the right to seize records, and allows the Minister and the Authority's board to regulate their work and set rewards for detection.
Official text (Arabic)
This article has not been amended since the law was issued.
1- يكون للموظفين المكلفين بضبط الأفعال المنصوص عليها في المواد (الستين بعد المائتين) و(الحادية والستين بعد المائتين) و(الثانية والستين بعد المائتين) من النظام، بموجب قرار من الجهة المختصة؛ صفة الضبط الجنائي في إثبات الجرائم والمخالفات المنصوص عليها في النظام، ولهم -في سبيل ذلك- التحفظ على ما يرونه متعلقًا بالجريمة أو المخالفة من سجلات ووثائق.
2- للوزير ولمجلس الهيئة -بحسب الأحوال- إصدار قواعد وضوابط تنظم عمل ومهمات الموظفين المشار إليهم في الفقرة (1) من هذه المادة ووضع قواعد منح مكافآت مالية للعاملين على كشف الجرائم والمخالفات المنصوص عليها في النظام.
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 268 explained in plain English
This article addresses how the offenses and violations provided for in the Companies Law are detected.
1- Judicial-officer status (paragraph 1):
- The employees charged with detecting the acts provided for in Articles 260, 261 and 262, by decision of the competent authority, have judicial-officer status in establishing the offenses and violations provided for in the Law.
- For this purpose they may seize the records and documents they consider related to the offense or violation.
These employees are not mere administrative monitors; they have the power to establish violating acts and seize the records and documents connected with them, provided that they are assigned by decision of the competent authority.
2- Regulating their work and rewards (paragraph 2): The Minister and the Authority's board, as the case may be, may:
- issue rules and controls regulating the work and tasks of these employees;
- set rules for granting financial rewards to those who work on detecting the offenses and violations provided for in the Law.
The article does not specify the details of these rules or the amount of the rewards but leaves them to what the Minister or the Authority's board issues.
Article 267 regulates the Ministry committee competent for the violations of Article 262 and the competence of the Authority's board over listed companies. Article 269 preserves the right of a person harmed to claim compensation.
If a company is subjected to detection procedures or seizure of its records, it is wise to use a lawyer specializing in commercial matters and companies.
Practical example
An employee assigned by decision of the competent authority visited a company in Dammam to verify a report of a violation of the Law's provisions. By virtue of judicial-officer status he may seize the records and documents he considers related to the offense.
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 268 of the Saudi Companies Law
May inspectors of the competent authority seize a company's records?
Yes. The employees charged with detecting by decision of the competent authority may seize the records and documents they consider related to the offense or violation.
Is there a reward for whoever detects violations of the Companies Law?
The Minister and the Authority's board, as the case may be, may set rules for granting financial rewards to those who work on detecting the offenses and violations provided for in the Law.
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
- 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
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 263
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.
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
- 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
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.