Article 3 of the Saudi Companies Law
المادة 3 من نظام الشركات · الباب الأول: أحكام عامة فصل تمهيدي
Article 3 provides that every company formed under the Companies Law is of Saudi nationality and must have its principal center in the Kingdom.
Official text (Arabic)
This article has not been amended since the law was issued.
تعد الشركة التي تؤسس وفقًا لأحكام النظام سعودية الجنسية، ويجب أن يكون مركزها الرئيس في المملكة.
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 3 explained in plain English
This article settles two linked questions for every company formed under the provisions of the Companies Law:
- Nationality: a company is considered of Saudi nationality as soon as it is formed under the provisions of the Companies Law. The criterion the article gives is formation under the Companies Law.
- Principal center: the company's principal center must be in the Kingdom. This is an obligation with no option.
A practical consequence follows: whoever forms a company under this law cannot place its principal center outside the Kingdom. Companies formed outside the Kingdom are not addressed by this article, which concerns only companies formed under the provisions of the Companies Law.
The article connects to Article 2, which defines a company as a legal entity formed under the Companies Law, and Article 4 then specifies the forms such a company may take. Anyone dealing with partners or investments from outside the Kingdom would do well to consult a lawyer specialized in companies or foreign investment.
Practical example
Saeed and his partner formed a limited liability company under the Companies Law and wished to base its main management in a city outside the Kingdom. This article shows them that the company is considered of Saudi nationality and that its principal center must be in the Kingdom.
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 3 of the Saudi Companies Law
What is the nationality of a company formed under the Companies Law?
A company formed under the provisions of the Companies Law is considered of Saudi nationality.
Can a company's principal center be outside the Kingdom?
No. The article requires the principal center of a company formed under the Companies Law to be in the Kingdom.
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 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
- Article 7
Article 7 specifies the founding document for each form of company, requires it to contain what the Companies Law requires and to be in Arabic, and directs the Ministry to prepare guidance templates.
1- يكون لكل شركة تؤسس وفقًا لأحكام النظام عقد تأسيس، عدا شركة المساهمة وشركة المساهمة المبسطة والشركة ذات المسؤولية المحدودة المملوكة لشخص واحد، فيكون لكل منها
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.