Article 269 of the Saudi Companies Law
المادة 269 من نظام الشركات · الباب الثالث عشر: العقوبات
The article provides that applying the Companies Law's penalties does not prejudice the right of anyone harmed to claim compensation from whoever caused the harm by committing the offenses and violations provided for in the Law.
Official text (Arabic)
This article has not been amended since the law was issued.
لا يخل تطبيق العقوبات الواردة في هذا الباب بحق أي شخص في مطالبة كل من تسبب له بضرر نتيجة ارتكاب أيّ من الجرائم والمخالفات المنصوص عليها في النظام بالتعويض.
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 269 explained in plain English
This article makes clear that punishment is one thing and compensation is another.
Applying the penalties in the part on penalties, whether prison, fines or alternative sanctions, does not prejudice the right of any person to claim compensation from whoever caused them harm as a result of committing any of the offenses and violations provided for in the Law.
It follows that:
- A fine paid by the violator is not regarded as compensation for the harmed person, and does not extinguish their right.
- The right to compensation is granted to any person harmed, such as the company, the partners, the shareholders, the creditors or others.
- This includes harm resulting from offenses (such as those in Articles 260 and 261) and from violations (such as those in Article 262) alike, because the article refers to the offenses and violations provided for in the Law.
The article does not specify how compensation is assessed or its procedures. Article 266 specifies the body that hears civil cases arising from applying the Law: the competent court, or the Committee for the Resolution of Securities Disputes with respect to listed joint stock companies.
Article 268 gives the employees charged with detection judicial-officer status, and Article 270 provides for the competent authority's right to supervise companies.
To assess whether compensation can be claimed in a particular case, it is advisable to consult a lawyer specializing in commercial matters and companies or a lawyer specializing in civil and compensation matters.
Practical example
A board member of a company in Riyadh was punished for committing one of the offenses provided for in the Law. Despite the penalty being imposed on him, the company and the shareholders harmed by his act keep the right to claim compensation from him for the harm they suffered.
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 269 of the Saudi Companies Law
Can I claim compensation if a company's manager is punished?
Yes. Applying the penalties does not prejudice the right of any person to claim compensation from whoever caused them harm as a result of the offenses or violations provided for in the Law.
Does a fine take the place of compensation?
No. The article provides that applying the penalties does not prejudice the harmed person's right to claim compensation.
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.