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Article 30 of the Saudi Companies Law

المادة 30 من نظام الشركات · الفصل الثالث: إدارة الشركة

The article provides that a discharge of management does not bar the action, and that a liability action will not be heard after 5 years or 3 years, whichever is later, except for forgery and fraud.

Official text (Arabic)

This article has not been amended since the law was issued.

1- لا تحول موافقة الشركاء أو الجمعية العامة أو المساهمين -بحسب الأحوال- على إبراء ذمة المدير أو أعضاء مجلس الإدارة دون إقامة الدعاوى وفقًا للمادة (التاسعة والعشرين) من النظام.

2- فيما عدا حالتي التزوير والاحتيال، لا تسمع دعوى المسؤولية بعد مضي (خمس) سنوات من تاريخ انتهاء السنة المالية للشركة التي وقع فيها الفعل الضار أو (ثلاث) سنوات من انتهاء عمل المدير أو عضوية العضو في مجلس الإدارة المعني، أيهما أبعد.

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 30 explained in plain English

This article sets two important rules for liability actions against management:

1- A discharge does not bar the action: approval by the partners, the general assembly or the shareholders, as the case may be, of a discharge of the manager or board members does not prevent actions being brought under Article 29. So the annual vote to discharge does not close the door on the company's action, the minority's action or the personal action.

2- Period after which the action will not be heard: a liability action will not be heard after the passing of:

  • 5 years from the end of the financial year in which the harmful act occurred, or
  • 3 years from the end of the work of the manager or the membership of the board member concerned,

whichever is later; that is, the period that ends later is the one that counts.

The exception: this period does not run in cases of forgery and fraud. The article sets no other period for these two cases.

The practical benefit is that someone considering a liability action should calculate both periods and use the later one, and should not rely on a previous discharge barring them. The actions meant are those set out in Article 29, that is, the company's action, the action of the partners or shareholders who represent the specified percentage, and the personal action. To calculate the period precisely in a particular case, it is advisable to consult a lawyer specializing in companies.

Practical example

A harmful act by a manager of a company in Riyadh occurred during a financial year that ended at the end of 2020, and the manager left his work in 2024. The five-year period ends at the end of 2025 and the three-year period in 2027, so the later one counts, and the action remains admissible until 2027, even if the assembly had previously discharged him.

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 30 of the Saudi Companies Law

Does a discharge of the board of directors prevent suing it?

No. Approval by the partners, the general assembly or the shareholders of a discharge does not prevent actions being brought under Article 29.

What is the period after which a liability action against a company manager will not be heard?

It will not be heard after 5 years from the end of the financial year in which the harmful act occurred or 3 years from the end of the manager's work, whichever is later.

Does a forgery or fraud action lapse after the same period?

No. The article excepts cases of forgery and fraud from the period after which the action will not be heard.

Articles this article refers to

More articles on Company Management and Managers' Liability

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.