Article 272 of the Saudi Companies Law
المادة 272 من نظام الشركات · الباب الرابع عشر: أحكام ختامية
If forming a company established by the State or a public legal person, or in which they participate, requires an exception from the Law, the formation request and the exception, with reasons, are submitted to the Council of Ministers.
Official text (Arabic)
This article has not been amended since the law was issued.
إذا كان طلب تأسيس الشركة التي تؤسسها أو تشترك في تأسيسها الدولة أو غيرها من الأشخاص ذوي الصفة الاعتبارية العامة المسموح لهم بذلك، يستلزم استثناء من بعض أحكام النظام، فيرفع طلب الموافقة على التأسيس والاستثناء -متضمنًا أسبابه- إلى مجلس الوزراء للنظر في الموافقة عليهما.
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 272 explained in plain English
This article addresses a special case concerning companies that are established by the State or by other persons with public legal personality who are permitted to do so, or in whose formation they participate with others.
The rule is that these companies are subject to the provisions of the Companies Law like any other, but forming some of them may require an exception from some provisions of the Law. In this case the article sets out the route to be followed:
- The request for approval of the formation and the request for the exception are submitted together.
- The request must include the reasons for the exception.
- It is submitted to the Council of Ministers to consider approving the formation and the exception.
Note that the article does not grant the exception automatically but makes it subject to the Council of Ministers' consideration and approval. It is also limited to persons with public legal personality who are permitted to form or participate in companies, and it does not itself specify who they are.
By contrast, Article 273 confirms that the provisions of the Law apply to stakes and shares owned by an endowment (waqf), meaning that these cases remain subject to the Law unless a special provision says otherwise.
Anyone taking part in a formation project of this kind is advised to consult a lawyer specializing in commercial matters and companies to learn what the request requires.
Practical example
A government entity wanted to form a company with private-sector investors in Riyadh, and its structure required an exception from some provisions of the Law. Under this article, the request for approval of the formation and the exception, including the reasons, is submitted to the Council of Ministers for consideration.
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 272 of the Saudi Companies Law
Can a government company be exempted from the Companies Law's provisions?
A request for an exception from some provisions of the Law may be submitted with the formation request to the Council of Ministers for consideration of approving them, where the company is formed by the State or a public legal person permitted to do so, or one that participates in its formation.
To whom is the request for an exception for a government company submitted?
To the Council of Ministers, and the request must include the reasons for the exception.
Is the exception granted automatically?
No. The article makes it a matter for the Council of Ministers to consider approving.
More articles on Company Formation
- Article 1
This article defines the key terms of the Companies Law, such as the Ministry, the Authority, the competent authority, relatives and day, and leaves the definition of other terms to the regulations.
1- يقصد بالكلمات والعبارات الآتية -أينما وردت في هذا النظام- المعاني الموضحة أمام كل منها، ما لم يقتضِ السياق غير ذلك: المملكة: المملكة العربية السعودية. النظام
- Article 2
Article 2 defines a company as a legal entity in which two or more persons contribute to a profit-seeking venture to share its profit and loss, and allows a company to be formed by one person or as a non-profit.
الشركة كيان قانوني يؤسس وفقًا لأحكام النظام بناء على عقد تأسيس أو نظام أساس يلتزم بمقتضاه شخصان أو أكثر بأن يساهم كل منهم في مشروع يستهدف الربح بتقديم حصة من ما
- Article 3
Article 3 provides that every company formed under the Companies Law is of Saudi nationality and must have its principal center in the Kingdom.
تعد الشركة التي تؤسس وفقًا لأحكام النظام سعودية الجنسية، ويجب أن يكون مركزها الرئيس في المملكة.
- Article 4
Article 4 sets out the five forms, one of which every company formed under the Companies Law must take.
تتخذ الشركة التي تؤسس وفقًا لأحكام النظام أحد الأشكال الآتية: أ- شركة التضامن. ب- شركة التوصية البسيطة. ج- شركة المساهمة. د- شركة المساهمة المبسطة. هـ- الشركة ذ
- Article 5
The article regulates a company's trade name: its language and sources, the former partner's consent to the use of his name, the indication of the company's form, and amendment of the name without affecting its rights and obligations.
1- يكون لكل شركة اسم تجاري باللغة العربية أو بلغة أخرى، ويجوز أن يكون الاسم مشتقًا من غرضها، أو اسمًا مميزًا، أو اسم واحد أو أكثر من الشركاء أو المساهمين فيها ا
- Article 6
Article 6 states who counts as a founder, regulates submitting the formation application to the commercial register, and gives founders the right to appeal a refusal to the Ministry and then to the competent judicial body.
1- يعد مؤسسًا كل من اشترك فعليًّا في تأسيس الشركة وساهم في رأس مالها بحصة نقدية أو عينية. 2- يقدم المؤسسون طلب تأسيس الشركة وقيدها إلى السجل التجاري، مرافقًا له
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.