Article 270 of the Saudi Companies Law
المادة 270 من نظام الشركات · الباب الثالث عشر: العقوبات
The article gives the competent authority the right to supervise the application of the Law and the company's contract, including inspection, examining accounts, requesting documents, and sending a representative to attend general assemblies.
Official text (Arabic)
This article has not been amended since the law was issued.
للجهة المختصة حق الرقابة على الشركات فيما يتعلق بتطبيق الأحكام المنصوص عليها في النظام وفي عقد تأسيس الشركة أو نظامها الأساس، بما في ذلك صلاحية التفتيش على الشركة وفحص حساباتها وطلب ما تراه من بيانات وسجلات ووثائق ومحاضر من مديري الشركة أو مجلس إدارتها أو الإدارة التنفيذية وذلك بوساطة مندوب أو أكثر من منسوبيها أو من خبراء تختارهم لهذا الغرض، ولها كذلك وفق تقديرها أن توفد مندوبًا (أو أكثر) بوصفه مراقبًا لحضور الجمعيات العامة للشركات، للتأكد من تطبيق أحكام 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 270 explained in plain English
This article establishes the competent authority's right to supervise companies, with respect to applying the provisions of the Companies Law and the company's articles of association or bylaws.
This supervision includes specific powers:
- Inspecting the company.
- Examining its accounts.
- Requesting what it sees fit of data, records, documents and minutes from the company's managers, board or executive management.
- Sending one or more representatives, at its discretion, as an observer to attend companies' general assemblies, to verify that the provisions of the Law are applied.
The competent authority exercises these powers through one or more of its staff, or experts it chooses for this purpose; the inspector may come from its employees or from experts it uses.
Article 271 complements this rule, requiring all officials in the company to give the Ministry's representatives, and the Authority's representatives if the company is a joint stock company listed on the capital market or seeking to be listed, each according to their jurisdiction, access to everything they request of the company's records and documents, and to give them the information and clarifications relating to that.
Article 269 preserves the right of a person harmed by offenses and violations to claim compensation.
To prepare a company for an inspection visit or to respond to a request for documents, you can use a lawyer specializing in commercial matters and companies.
Practical example
An unlisted joint stock company in Jeddah held its annual general assembly, and the competent authority sent a representative to attend it as an observer. It later also asked the board for the minutes of its meetings and some accounting records to examine them, and the company must allow its representative to do so.
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 270 of the Saudi Companies Law
May the competent authority inspect companies?
Yes. It has the right to supervise companies, including inspecting them, examining their accounts and requesting data, records, documents and minutes from their managers, board or executive management.
Does a representative of the competent authority attend a company's general assembly?
At its discretion, it may send one or more representatives as an observer to attend general assemblies to verify that the provisions of the Law are applied.
Can the inspector be from outside the competent authority?
Yes. The competent authority exercises supervision through one or more of its staff or experts it chooses for this purpose.
More articles on Company Management and Managers' Liability
- Article 11
The article allows founders, partners and shareholders to conclude agreements regulating their relationship, and a family charter for family companies, and makes them binding provided they do not contravene the Law or the company's founding document.
1- يجوز للمؤسسين أو الشركاء أو المساهمين -سواء خلال مدة تأسيس الشركة أو بعدها- ما يأتي: أ- إبرام اتفاق أو أكثر ينظم العلاقة فيما بينهم أو مع الشركة، بما في ذلك
- Article 16
Article 16 sets a company's financial year at twelve months fixed by the formation contract or bylaws, with the first financial year allowed to run between 6 and 18 months from registration.
تكون السنة المالية للشركة (اثني عشر) شهرًا تُحدد في عقد تأسيسها أو نظامها الأساس. ومع ذلك، يجوز أن تحدد السنة المالية الأولى بما لا يقلّ عن (ستة) أشهر ولا يزيد
- Article 17
Article 17 requires keeping accounting records, preparing annual financial statements and filing them within 6 months of the end of the financial year, and supplying a controlling company with the information it needs.
1- على الشركة الاحتفاظ بالسجلات المحاسبية والمستندات المؤيدة لها لتوضيح أعمالها وعقودها وقوائمها المالية في مركز الشركة الرئيس أو في أي مكان آخر يحدده مدير الشر
- Article 18
Article 18 requires a company to have a licensed auditor appointed by the partners, general assembly, or shareholders, and regulates the auditor's removal, with notice to the competent authority within 5 days, and resignation by reasoned written notice.
1- يكون للشركة مراجع حسابات (أو أكثر) من المراجعين المرخص لهم في المملكة يعينه ويحدد أتعابه ومدة عمله ونطاقه الشركاء أو الجمعية العامة أو المساهمون بحسب الأحوال
- Article 19
The article exempts micro and small companies and the general partnership company from the requirement to appoint an auditor in Article 18, with specified exceptions, and allows holders of 10% of voting rights to request that one be appointed.
1- لا يسري على الشركة متناهية الصغر والصغيرة الحكم المتعلق بإلزامية تعيين مراجع الحسابات الوارد في المادة (الثامنة عشرة) من النظام، عدا الشركة متناهية الصغر وال
- Article 20
The article sets the auditor's obligations: independence and the bar on combining roles or conflicts, his right to inspect company documents, submitting his report to the partners or general assembly, keeping secrets, and liability for his errors.
1- يجب أن يتصف مراجع حسابات الشركة بالاستقلال وفقًا لما تحدده المعايير المهنية المعتمدة في المملكة. 2- لا يجوز الجمع بين عمل مراجع الحسابات والاشتراك في تأسيس ا
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.