Article 34 of the Saudi Companies Law
المادة 34 من نظام الشركات · الفصل الثالث: إدارة الشركة
Article 34 allows a partner's or shareholder's personal creditor to ask for the sale of what is needed of their shares or stock to collect their right, with other partners' right of redemption and shareholders' priority in specified cases.
Official text (Arabic)
This article has not been amended since the law was issued.
مع مراعاة أحكام نظام ضمان الحقوق بالأموال المنقولة، والأنظمة الأخرى ذات العلاقة، للدائن الشخصي للشريك أو المساهم -فضلًا عن الحق المشار إليه في المادة (الثالثة والثلاثين) من النظام- أن يطلب من الجهة القضائية المختصة ما يأتي:
أ- بيع ما يلزم من حصص ذلك الشريك ليتقاضى حقه من حصيلة بيعها، ويكون لباقي الشركاء الحق في استرداد تلك الحصص وفقًا لأحكام النظام.
ب- بيع ما يلزم من أسهم ذلك المساهم ليتقاضى حقه من حصيلة بيعها. ويكون للمساهمين -في شركة المساهمة غير المدرجة في السوق المالية وشركة المساهمة المبسطة- الأولوية في شراء تلك الأسهم خلال (خمسة عشر) يومًا من تاريخ عرضها للبيع إذا نص نظام الشركة الأساس على ذلك.
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 34 explained in plain English
This article adds another means for the personal creditor of a partner or shareholder, in addition to their right mentioned in Article 33 to collect their debt from their debtor's share of net distributed profits.
The creditor may ask the competent judicial body for the following:
- Sale of what is needed of the partner's shares so as to collect their right from the sale proceeds, and the other partners have the right to redeem those shares in accordance with the Companies Law.
- Sale of what is needed of the shareholder's stock so as to collect their right from the sale proceeds. In a joint stock company not listed on the financial market and a simplified joint stock company, the shareholders have priority to buy that stock within 15 days of its being offered for sale, provided the company's bylaws so provide.
The sale is of what is needed to pay the right, not necessarily everything the debtor owns.
The article qualifies this right with the phrase "subject to the Security Over Movable Assets Law and other related laws," so those laws must be consulted when applying it, and the article itself does not set out their details; it also refers to the Companies Law for redemption without detailing it here.
To assess the appropriate procedure in your case, it is advisable to consult a lawyer specialized in company and commercial matters.
Practical example
Abdullah has a financial right against his friend Majid, and Majid owns stock in a simplified joint stock company in Riyadh. Abdullah can ask the competent judicial body to sell what is needed of Majid's stock so he can collect his right. If the company's bylaws provide priority for the shareholders, they may buy this stock within 15 days of its being offered for sale.
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 34 of the Saudi Companies Law
Can a partner's shares be sold to pay their personal debt?
Yes. The personal creditor may ask the competent judicial body to sell what is needed of the partner's shares, and the other partners have the right to redeem those shares in accordance with the Companies Law.
How long is shareholders' priority to buy stock offered for sale?
15 days from the date it is offered for sale, in a non-listed joint stock company and a simplified joint stock company, if the company's bylaws so provide.
Does this right cancel the creditor's right to profits?
No. The article gives this means in addition to the right mentioned in Article 33.
Articles this article refers to
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.