Article 274 of the Saudi Companies Law
المادة 274 من نظام الشركات · الباب الرابع عشر: أحكام ختامية
The article sets the Authority's competence to supervise listed joint stock companies, the governance regulations, the beneficial owner information rules, and the Minister's and the Authority's board's power to issue implementing decisions.
Official text (Arabic)
This article has not been amended since the law was issued.
1- تكون الهيئة الجهة المختصة بالإشراف على شركات المساهمة المدرجة في السوق المالية ومراقبتها، وإصدار القواعد المنظمة لعملها، بما في ذلك تنظيم عمليات الاندماج إذا كان أحد أطرافها شركة مساهمة مدرجة في السوق المالية.
2- تضع الجهة المختصة لائحة لحوكمة شركات المساهمة تتضمن قواعد لقيادة الشركة وتوجيهها، وتشتمل على: كيفية تنظيم العلاقات المختلفة بين مجلس الإدارة والإدارة التنفيذية والمساهمين وأصحاب المصالح، وتفعيل دور المساهمين في الشركة وتيسير ممارسة حقوقهم، وتفعيل دور مجلس الإدارة واللجان المنبثقة منه ولجان الشركة وتطوير كفايتها، وتحديد ضوابط تشكيل مجالس إداراتها والترشح لعضويتها بما في ذلك وضع قواعد وإجراءات خاصة لتسهيل عملية اتخاذ القرارات وإضفاء طابع الشفافية والمصداقية عليها بغرض حماية حقوق المساهمين وأصحاب المصالح وتحقيق التنافسية والشفافية في السوق وبيئة الأعمال، وقواعد وإجراءات خاصة لحوكمة الجمعيات العامة وبيان اختصاصاتها. وللوزارة وضع لائحة لحوكمة الشركات الأخرى، تتضمن ما ورد في هذه الفقرة بما لا يتعارض مع طبيعتها.
3- للوزارة وضع القواعد والإجراءات اللازمة التي تكفل حصولها على معلومات المستفيد الحقيقي من الشركات الخاضعة لأحكام النظام وذلك فيما عدا ما يتعلق بشركات المساهمة المدرجة في السوق المالية.
4- يصدر الوزير ومجلس الهيئة -كل فيما يخصه- ما يلزم من ضوابط وقرارات لتنفيذ 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 274 explained in plain English
This article sets out the distribution of powers among the bodies responsible for applying the Companies Law, in four paragraphs:
- Listed companies: The Authority is the body competent to supervise and monitor joint stock companies listed on the capital market and to issue the rules regulating their work, which includes regulating mergers if one of the parties is a listed joint stock company.
- Governance regulations: The competent authority issues a governance regulation for joint stock companies, containing rules for leading and directing the company, including: regulating the relationships among the board, the executive management, the shareholders and stakeholders, activating the role of the shareholders and facilitating the exercise of their rights, activating the role of the board and its committees and developing their competence, controls for forming boards and standing for membership of them, and rules for governing general assemblies. The stated aim is to protect the rights of shareholders and stakeholders and to achieve competitiveness and transparency. The Ministry may issue a governance regulation for other companies in a manner that does not conflict with their nature.
- Beneficial owner: The Ministry may set the rules and procedures that ensure it obtains beneficial owner information from the companies subject to the Law, except joint stock companies listed on the capital market.
- Implementing decisions: The Minister and the Authority's board, each within their competence, issue the controls and decisions needed to implement the provisions of the Law.
The article does not state the details of these regulations and rules but refers them to what the bodies mentioned issue. It is complemented by Article 275, which allows the competent authority to use public or private bodies and assign some of its tasks to them.
To learn the governance requirements that apply to a particular company, it is advisable to consult a lawyer specializing in commercial matters and companies or in securities.
Practical example
A joint stock company listed on the capital market in Dammam plans to merge with another company. Under paragraph (1) of this article, the Authority is the body competent to regulate the merger because one of its parties is a listed joint stock company.
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 274 of the Saudi Companies Law
Who supervises companies listed on the capital market?
The Authority is the body competent to supervise and monitor joint stock companies listed on the capital market and to issue the rules regulating their work.
Who issues the company governance regulations?
The competent authority issues a governance regulation for joint stock companies, and the Ministry may issue a governance regulation for other companies in a manner that does not conflict with their nature.
Does the Ministry ask all companies for beneficial owner information?
The Ministry may set the rules that ensure it obtains beneficial owner information from the companies subject to the Law, except joint stock companies listed on the capital market.
More articles on Joint Stock Company
- Article 58
Article 58 defines the joint stock company as formed by one or more persons, with capital divided into tradable shares, liable alone for its debts, with a shareholder's liability limited to the value of the shares subscribed.
شركة المساهمة: هي شركة يؤسسها شخص واحد أو أكثر، من ذوي الصفة الطبيعية أو الاعتبارية، ويكون رأس مالها مقسمًا إلى أسهم قابلة للتداول، وتكون الشركة وحدها مسؤولة عن
- Article 59
Article 59 requires a joint stock company's issued capital to be at least SAR 500,000, with not less than one quarter paid at formation.
يجب ألا يقلّ رأس مال شركة المساهمة المصدر عن (خمسمائة ألف) ريال، ويجب ألا يقلّ المدفوع منه عند التأسيس عن (الربع).
- Article 60
Article 60 states that a joint stock company has an issued capital representing subscribed shares and may have an authorized capital, within which the board may increase the issued capital once it has been paid in full.
1- يكون لشركة المساهمة رأس مال مصدر يمثل الأسهم المكتتب بها، ويجوز أن يحدد نظام الشركة الأساس رأس مال مصرحًا به. 2- يجوز بقرار من مجلس إدارة الشركة زيادة رأس ال
- Article 61
The article lists what the articles of association of a joint stock company must contain and the documents attached to them when applying to incorporate the company.
1- يجب أن يشتمل النظام الأساس لشركة المساهمة بصفة خاصة على البيانات الآتية: أ- اسم الشركة. ب- المركز الرئيس للشركة. ج- غرض الشركة. د- رأس مال الشركة المصرح به -
- Article 62
The article requires the founders, if they do not subscribe to all the company's shares themselves during incorporation, to offer the remaining shares for subscription in accordance with the Capital Market Law.
إذا لم يقصر المؤسسون خلال مرحلة التأسيس الاكتتاب بجميع الأسهم على أنفسهم، وجب عليهم طرح الأسهم التي لم يكتتبوا بها للاكتتاب وفقًا لنظام السوق المالية.
- Article 63
The article gives the Ministry and the Authority the power to set the controls, procedures, documents and approvals for incorporating a joint stock company whose shares are offered for public subscription during incorporation or which is listed on the capital market.
للوزارة والهيئة وضع الضوابط والإجراءات وتحديد الوثائق والموافقات اللازمة لتأسيس شركة مساهمة تطرح أسهمها للاكتتاب العام خلال مرحلة التأسيس أو تدرج في السوق المال
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.