Article 47 of the Saudi Companies Law
المادة 47 من نظام الشركات · الفصل الرابع: الحصص والشركاء في شركة التضامن
Article 47 requires a general partnership's profits and losses and each partner's share to be determined at year end, makes the partner a creditor for their profit share, and bars requiring them to restore their share after losses without consent.
Official text (Arabic)
This article has not been amended since the law was issued.
1- يجب أن تحدد الأرباح والخسائر ونصيب كل شريك فيها عند نهاية السنة المالية للشركة من واقع قوائم مالية معدة وفقًا للمعايير المحاسبية المعتمدة في المملكة، ويعد كل شريك دائنًا للشركة بنصيبه في الأرباح بمجرد تحديد هذا النصيب، ما لم ينص عقد تأسيس الشركة على أحكام خاصة بالأرباح والخسائر.
2- يكمَّل ما نقص من رأس مال الشركة بسبب الخسائر من أرباح السنوات التالية، وفيما عدا ذلك لا يجوز إلزام الشريك بتكملة ما نقص من حصته في رأس المال بسبب الخسائر إلا بموافقته.
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 47 explained in plain English
This article regulates profits and losses in a general partnership company in two paragraphs:
1- Determining profits and losses: profits and losses and each partner's share in them must be determined at the end of the financial year, from financial statements prepared in accordance with the accounting standards approved in the Kingdom. Each partner becomes a creditor of the company for their share of the profits as soon as that share is determined. The formation contract may provide special rules on profits and losses that differ from this.
2- Covering losses: any reduction in the company's capital caused by losses is made up from the profits of subsequent years. Otherwise a partner may not be required to make up what has been lost of their share in the capital because of losses except with their consent.
In practice this means a partner is not asked to pay additional money to restore the capital to what it was, but later profits are used first to make up the shortfall. This differs from the question of the partner's personal liability for the company's debts toward creditors, which is regulated by Article 48, under which a partner may not be required to pay a debt of the company from their own funds until the debt is established against the company by a final judgment or an enforceable instrument, the company has been put on notice, and collection from it has proved impossible.
To review the profit and loss provisions in your company's contract, it is advisable to consult a lawyer specialized in company and commercial matters.
Practical example
A general partnership company in Jeddah lost part of its capital in a weak year, and then made profits the following year. Under this article, the following year's profits are used to make up the shortfall in capital, and no partner may be required to pay an additional amount to make up their share except with their consent, unless the formation contract has special provisions.
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 47 of the Saudi Companies Law
When does a partner become a creditor of the company for their profits?
As soon as their share of the profits is determined at the end of the financial year from the financial statements, unless the formation contract has special provisions.
Is a partner forced to cover capital losses from their own money?
A partner may not be required to make up what has been lost of their share in the capital because of losses except with their consent, and the shortfall is made up from the profits of subsequent years.
On what basis are the company's profits determined?
From financial statements prepared in accordance with the accounting standards approved in the Kingdom.
More articles on General Partnership
- 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 35
Article 35 defines the general partnership company as one formed by two or more persons, each personally and jointly liable with all their assets for its debts, and in which the partner acquires the status of a merchant.
شركة التضامن: هي شركة يؤسسها شخصان أو أكثر من ذوي الصفة الطبيعية أو الاعتبارية يكونون فيها مسؤولين شخصيًّا في جميع أموالهم وبالتضامن عن ديون الشركة والتزاماتها،
- Article 36
Article 36 sets out the data the formation contract of a general partnership company must contain in particular, from the partners' names and capital to management, profits, and dissolution.
يجب أن يشتمل عقد تأسيس شركة التضامن بصفة خاصة على البيانات الآتية: أ- أسماء الشركاء، وبياناتهم. ب- اسم الشركة. ج- المركز الرئيس للشركة. د- غرض الشركة. هأ- رأس م
- Article 37
Article 37 regulates a general partnership company's management: by the partners or a manager they appoint, with rules on multiple managers, their powers, and the company's commitment to their acts within its purpose.
1- يتولى إدارة شركة التضامن الشركاء فيها، ويحدد الشخص ذو الصفة الاعتبارية ممثله في الإدارة. ويجوز أن يتفق الشركاء في عقد تأسيس الشركة أو في عقد مستقل، على تعيين
- Article 38
Article 38 makes partners' resolutions in a general partnership company by numerical majority and requires their unanimity to amend the formation contract unless the contract provides otherwise.
تصدر قرارات الشركاء بالأغلبية العددية، إلا إذا كان القرار متعلقًا بتعديل عقد تأسيس الشركة فيجب أن يصدر بإجماع الشركاء، ما لم ينصّ في عقد التأسيس على غير ذلك.
- Article 39
Article 39 bars a general partnership's manager from acts beyond the company's purpose unless the partners resolve otherwise or the formation contract expressly allows it, and lists acts to which the bar applies in particular.
يحظر على المدير أن يباشر الأعمال التي تتجاوز غرض الشركة إلا بقرار من الشركاء أو بنصّ صريح في عقد تأسيس الشركة. ويسري هذا الحظر بصفة خاصة على الأعمال الآتية: أ-
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.